Countrywide Financial Corporation (NYSE:CFC) shares spiked over fifteen percent today after troubled realestate firm posted better than expected earnings. The company reported a net loss of $1.2 billion, or $2.85 per diluted share, compared to net income of $1.03 per diluted share in the third quarter of 2006.

"Countrywide's results for the third quarter of 2007 reflect the impact of unprecedented disruptions in the U.S. mortgage market and the global capital markets, as well as continued weakening in the housing market," said Angelo R. Mozilo, Chairman and Chief Executive Officer. "However, during the period we also laid the foundation for a return to profitability in the fourth quarter. Countrywide has responded decisively and taken the steps we believe are necessary to address the current challenging market environment."

Countrywide's guidance was the most carefully watched area of its earnings. The company expects weakness in the housing market to continue in the near-term and absent declining interest rates, lower mortgage market origination volumes are anticipated through 2008. However, the company said it expects to be profitable in the fourth quarter of 2007 and in 2008.

"We view the third quarter of 2007 as an earnings trough, and anticipate that the Company will be profitable in the fourth quarter and in 2008," said David Sambol, President and Chief Operating Officer. "Over the longer term, we believe that prospects for the U.S. housing and mortgage markets, as well as for Countrywide, remain very attractive."

In the end, this is great news for Countrywide shareholders. The company's problems aren't nearly as bad as many people once believed, as the real estate firm looks to return to profitability before the year is over. The company also noted that it wss taking advantage of the industry consolidation to bolster its future prospects even further. Combined, these factors make CFC a stock worth watching!

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