Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes ______ No ___X___

Indicate by check mark whether by furnishing the information contained in this Form,
the Registrant is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes ______ No ___X___

If “Yes” is marked, indicate below the file number assigned
to the registrant in connection with Rule 12g3-2(b): N/A

2

CHAIRMAN'S  LETTER 

Since my appointment as Chairman of the Board in November 2010, Gafisa has embarked upon a new era of independence to become one of the few Brazilian companies with no majority ownership and where independent directors occupy most board seats. This transition has been facilitated by significant governance, structural and operating changes that will create long-term value for our shareholders.

In April 2011, we implemented a Board restructuring in which we added four new directors, including three highly qualified and experienced independent board members. With a new management structure also in place, both the Board and management immediately sought to implement new measures to redirect the Company’s trajectory and financial performance, as well as address the high level of indebtedness that had put a strain on the Company.

Over the past several years, Gafisa has experienced accelerated growth as the home building industry expanded into the rapidly emerging lower income and first home buyer market segments. Our strategy to address these new market opportunities was to acquire a portion  of Tenda, a leader in the lower income segment at the end of 2008. While we continue to believe the strategy to enter the low income segment was sound, we did not fully appreciate the extent of operational and managerial problems at Tenda, nor were we adequately prepared to manage a much larger and more complex organization. The hurdles we encountered included a shortage of skilled workers, the absence of robust technical and managerial resources, deficient supply chains across a number of projects and internal controls which did not reflect the new size, structure, and complexity of the business. The consequence was an erosion in value and margins, delays and a higher than anticipated consumption of capital.

The Board and management have worked diligently to address these matters. First we undertook a thorough assessment of Gafisa, Alphaville and Tenda to better understand the challenges relating to their organizational and operational structures, managerial practices, and strengths and capabilities. The result was a substantial and necessary course correction that included, the implementation of a new strategy, an improved organizational structure, the addition of certain key personnel with appropriate skill sets to match the business’ needs, and the implementation of enhanced management and corporate best practices.

The assessment of each of the Company’s three brands was conducted in a thorough manner and the new budget reflects the allocation of capital adjusted for opportunity and risk, respectively. We are confident that this new capital allocation strategy will allow for sustainable growth in the Company, stronger business fundamentals, and greater value.

As we move through 2012, we will continue to implement our new strategy and position the Company for sustainable growth. While we still have significant challenges to address due to the long-term cycles present in our business and rapidly changing market dynamics, we remain confident that we are back on course and that we will achieve significant improvements across all metrics over the next several quarters. To assist us in reaching our objective of enhancing shareholder value, we appointed André Bergstein as CFO and IRO in March. André is a seasoned executive with extensive industry experience and will report directly to the Gafisa Group CEO, Duilio Calciolari. In addition, we appointed new leaders at Gafisa, Tenda and Alphaville, namely Sandro Gamba, Rodrigo Osmo, and Marcelo Willer, respectively. The Board is committed to management best practices and is intent on creating long-term value for shareholders and restoring their trust.

Gafisa is a world-class company with a strong heritage and an exciting future. It is widely recognized for its leadership, innovation and professionalism. We are confident in Gafisa’s revised structure and strategy, strong brands and appropriate product mix.

We remain fully supportive of Duilio and his team as they strive to create value for our customers, partners and shareholders.

Caio Racy Mattar

Chairman – Gafisa S.A.

4

CEO COMMENTS   

Before I detail the factors behind the deterioration in Gafisa’s performance, and outline the structural changes and remedies undertaken to ensure a return to profitability, I would like to emphasize that management is entirely committed to restoring the health of our Company and the confidence of investors.

I would also like to share my sincere conviction in Gafisa’s bright future. Our company boasts three of the most widely recognized brands in the Brazilian homebuilding industry, each of which enjoys core strengths that make them unique in the sector. The Gafisa brand has cultivated a valuable reputation through a 50-year history in its principal markets of São Paulo and Rio de Janeiro, while the AlphaVille segment is, undoubtedly, one of the highest margin businesses in the sector, and faces little competition. It is clear that Tenda’s performance to date has not matched expectations. However, we are convinced that the market potential for this segment is immense. Every day more than 20,000 people visit Tenda’s website seeking information about our developments. Its well established nationwide platform, newly developed aluminum mold technology that has already delivered cost improvements, and investment in relationships to become one of Caixa Economica Federal’s top three partners means the brand is poised to capitalize off this demand in a controlled manner.

Gafisa is a company with a strong heritage and reputation that grew beyond the market’s capacity, the ramifications of which I will now explain. In 2005, like many other Brazilian homebuilders, we made a strategic decision to capitalize on our experience and reputation in the middle and high-income segments by broadening our product lines to incorporate the nascent but growing higher-end residential lot market and the rapidly emerging lower income segment. In order to participate in these market segments we acquired AlphaVille and Tenda, changing the profile of the Company from one that during its long history had served the mid- to high-income segments primarily in the cities of São Paulo and Rio de Janeiro, to a Company that today caters to every income segment in the market. The value of annual launches has more than tripled to R$3.5 billion and our land bank has grown more than 20-fold to R$17.6 billion. During the same time period we delivered approximately 45,000 units, culminating in a record 23,000 deliveries in 2011 alone.

I was appointed interim CEO of Gafisa on May 9, 2011, and the Board confirmed my appointment as CEO on July 5, 2011. During my first three months as CEO I engaged the entire management team, with the support of our Board of Directors and our management consultants, Bain & Company, in a review of our Company’s operating units and overall strategy. The results of this review led to our decision in October 2011 to: (i) establish a new operating structure by brands; (ii) reduce risk at Tenda; (iii) expand the contribution of AlphaVille´s successful developments in our product mix and; (iv) refocus the Gafisa brand on its core markets of São Paulo and Rio de Janeiro.

At the time of our third quarter results, we announced a 30% reduction in our 2011 launch guidance to R$3.5 billion to reflect our decision to slow the growth of our low-income business, as well as, narrow the geographic scope of the Gafisa business. In the final quarter of 2011, Gafisa restructured its operations by creating individual business units, with strong links between performance incentives and goals.  Each of these is responsible for all aspects of the brand segment from development through to construction and delivery. This is an important departure as construction for each of the segments had previously been centralized under one group within Gafisa, hampering the timely detection of higher than budgeted costs.

Following the establishment of individual business units, these executives immediately undertook a thorough analysis of the Group’s developments and suppliers, vetting them for quality, performance and reliability. What this process further clarified was a mismatch between the physical and reported progress of construction within Tenda due to factors such as subcontractor failure to perform and their bankruptcies. The full expense required to take-over projects from these subcontractors was also identified. In addition, at Gafisa a number of projects managed by third parties led to unexpected cost overruns, which have been reported in the fourth quarter. With the acceleration of deliveries in 2011, primarily during the later portion of the year, these cost deviations came to light.

As noted in our 4Q11, operational preview, financial results also reflect the dissolution of Tenda contracts with potential homeowners no longer qualifying for bank mortgages due to a change in circumstance. The dissolutions refer to units which were on average 70% complete and required an upfront down payment of 6%. Units returned to inventory are expected to be resold in a timely manner and at a premium to the original price.

The fourth quarter of 2011 is an atypical quarter due to the impact of structural changes, the recognition of cost overruns, cancellations and contract dissolutions at Tenda, as well as our more targeted strategy. This has had a material impact on our fourth quarter and therefore our full-year operating profitability. However, this has not impacted our 4Q11 liquidity. The negative full year EBITDA of - R$339 million and loss of R$945 million are impacted by expenses related to our revision and correction process of R$889.5 million (83% of this impact is being recognized in 2011 and 17% in 2010) and revenue reversals of R$1.2 billion.

Management and the board treat these results seriously and have undertaken widespread structural and operational changes to avert future losses and strains on the business. Tenda is now operating under a new strategy whereby pre-sales recognition and the remuneration of the sales force is based on the ability to immediately pass mortgages on to financial institutions and the number of third party construction partners has been reduced to a group that has been thoroughly vetted for quality and sustainability.

Included in the amounts above is an additional provision to cover potential cost overruns in all impacted developments yet to be completed. We have also taken a provision for expected dissolutions at Tenda during 2012 as we deliver the majority of the remaining units.

We expect to generate R$500-R$700 million of operating cash flow in 2012 which is sufficient to meet our obligations.

In addition, we will enhance cash flow by restricting the launch of developments at Tenda and re-launching the business under a profitable business model focused on fewer and higher potential geographic regions as well as the Gafisa brand’s most profitable historical markets, namely São Paulo and Rio de Janeiro. 

Our responsibility is to maximize the value of Gafisa and deliver strong returns to our shareholders. We are confident that we have a business model and a management team in place to profitably develop new and existing projects with the use of appropriate funding vehicles. With a stronger structure set in place, we expect our results to improve significantly over the coming years.

Duilio Calciolari, CEO -- Gafisa S.A.

RECENT EVENTS   

New Operating Structure which Establishes P&L Owners by Brand

Gafisa is now operating under a new structure whereby individual business units are responsible for all aspects of the brand segment from development through to construction and delivery. All three business units are managed by executives with direct P&L responsibility, ensuring management is incentivized to deliver credible results.

The new head of the Gafisa brand is Sandro Gamba, who has been with the Company for more than 15 years and has served in a number of senior regional roles including the head of business development and director and manager of prospecting land. AlphaVille head Marcelo Willer was previously the brand’s real estate development officer. Prior to assuming this role in 2006 he served as project officer in the six years prior. After Rodrigo Osmo’s significant success in integrating and expanding the AlphaVille segment, he was named head of Tenda in December 2011. He has since led the turnaround at Tenda.  With Rodrigo Osmo’s appointment as Tenda head, Duilio Calciolari, Gafisa Group CEO, resumed an interim role as CFO until the appointment of André  Bergstein in March 2012.

Appointment of New Chief Financial Officer with Extensive Industry Experience

André Bergstein brings 20 years of experience in the financial and real estate markets to Gafisa.

He is a highly regarded professional in the real estate industry. Prior to joining Gafisa, he led the real estate team at Plural Capital, responsible for real estate backed structured transactions. For the previous five years, he served at Brazilian Finance & Real Estate (BFRE) as CFO and IRO for the holding company, and as CFO of Brazilian Securities, where he led several structured operations of MBS’ (mortgage backed securities) and FII´s (real estate investment funds) and was active in M&A deals for BFRE. Prior to joining BFRE, he served as chief financial officer at Atlântica Residencial, a homebuilder focused on residential projects aimed at middle and low income groups, with local and foreign shareholders. He began his career as a financial analyst at Icatu Bank in 1993. Andre Bergstein has a degree in electrical engineering from the Pontifical Catholic University of Rio de Janeiro (PUC-RJ) and holds an MBA from IBMEC Rio de Janeiro.

Update on AlphaVille Negotiations and Achievements

The company hired an independent financial advisor to run the valuation of the remaining 20% stake of AlphaVille that Gafisa does not already own. Negotiations  are on track and progressing according to the process outlined to shareholders.

In 2011, AlphaVille was recognized for its building capability and awarded a Master Real Estate Award. The brand remains a highly valued part of the Gafisa group and its share of the product mix is expected to increase over coming years.

RECENT EVENTS  (CONT.) 

Tenda Achievements

The Gafisa Group remains committed to the Tenda brand and expects a turnaround strategy underway to take advantage of sizeable market potential in this segment. Tenda is one of the top three unit constructors in the country thanks to its established nationwide platform. Every day on average 22,000 people visit its website seeking information on developments and hundreds more visit each of its 22 shop fronts, which are conveniently located in commercial centers.

KEY NUMBERS FOR THE GAFISA GROUP 

.

GAFISA AND TENDA ADJUSTMENTS 

During the fourth quarter the Company established three separate operating units for the Gafisa, AlphaVille and Tenda brands, which are headed by executives with profit and loss responsibility. As a result of the analysis conducted by the new teams, the Company identified important adjustments related to the strategic shift at Gafisa and the new operating model adopted at Tenda which are reflected in the fourth quarter as follows:

	Cost overruns related to construction of R$587 million (R$231 million in Gafisa and R$356 million in Tenda) equivalent to 8% of the original total cost base of projects. 49% of the preliminary value relates to developments executed by third parties and franchisees, 26% relates to developments in regions that have been discontinued, and 25% from construction managed in-house.  The impact  isR$440.9 million (64% was in 2011 and 36% in 2010).
	A thorough review of the Tenda portfolio of receivablesidentified 4K customers who are no longer eligible for bank mortgages and whose contracts were terminated, resulting in an impact of R$91.2 million. The dissolution of contracts with potencial property owners involves units that are, on average, more than 70% complete; where we collected an average down payment of 6% of the total value of the unit. The units were returned to inventory and became eligible for resale to qualified mortgage borrowers. Additionally, provisions were made for future dissolutions equivalent to 8K units, resulting in a net impact of R$80.0 million in the period. Also, provisions for bad debts amounted to R$105 million (94% Tenda).
	An impairment related write-downofR$37.9 million based on a downward valuation of land bank Gafisa no longer intends to develop in the near term as result of its narrowed geographic focus, and R$57.9 million related to Tenda’s land bank. These tracts of land may be sold in the future. Development expenses related to the land acquisition process at Gafisa of R$14.9 million and R$10.6 million at Tenda were recognized as a sunk cost.
	Other provisions related to penalties from delayed projectsequivalent to R$12.7 million at Gafisa and R$38.5 million at Tenda. Also, the cancellation of projectshad an impact on Tenda’s results of R$17.4 million.

For detailed information on the factors contributing to the above outcome, please refer to the following table.

Note: Each number correspond to the items related to the adjustments accounted in 2011, the remaining R$180 million was accounted in previous year.

It should be noted that based on accounting provisons, the Company did not account for the respective deferred income tax assets of R$251.8 million related to tax loss carry forwards and R$106.3 million related to timing differences.

The revenue reversal totaled R$1.2 billion, as shown in the table above. However, we expect to rebook: (1) 60% of the revenue reversal with resale of returned units; and (2) 34% will be recognized in accordance with PoC of the related projects (79% launched< 2008). Only 6% of the total is unrecoverable.

Overall, the impact on the 4Q11 result totaled R$889.5 million (83% in 2011 and 17% allocated in 2010). It should be noted that 70% of adjustments stemmed from Tenda’s operations. The substantial economic impact observed in 4Q11 had no cash flow impact in the same period. In addition, the resale of units returned o inventory to qualified customers will gradually reduce the Company’s leverage.

8

RECONCILIATION OF FINANCIAL DATA 

Adjustments to 2010 financial statements

In line with a new strategy set out in the fourth quarter of 2011, we conducted a detailed budget review. This review identified adjustments that relate to the 2010 financial year, but which were not detected by internal controls that year.

The cost adjustments primarily relate to operational issues stemming from relationships with franchisees, partners and contractors, revisions to vendor contracts and modifications to projects.

Management apportioned costs to the 2010 financial year according to whether: (1) Construction launched in 2010 was more than 50% complete by 2011, (2) Construction was brought in house in 2010 following budget overruns related to the use of contractors, partners and franchisees, (3) Additional costs incurred for projects delivered in the first quarter of 2011 related to projects launched in 2010, (4) Projects whose costs were higher than budgeted had their foundations laid in 2010.

The retroactive effect of 2010 cost adjustments, as set out in IAS 8 / CPC 23 - Accounting Policies, Changes in Accounting Estimates and Errors, is contained in the below table.

In addition, the following reclassifications were made to better compare the 2011 and 2010 financial statements: (a) Reclassification of deferred income tax and social contribution taxes on tax revenue from an accrual to cash basis, as determined in accordance with the tax regime assumed under the heading "Taxes" in the short and long term, (b) Reclassification of advances for future capital increase under the heading "Investment" (c) Reclassification of the brokerage, the deductions from revenue, under the heading "Selling" (d) Presentation of the balance of net deferred tax, per group of business, (e) Reclassification of balances shown under "Accounts receivable and incorporation services" between short and long term.

Table 3 – Reconciliation of 2010 and 2011 Financial Data (R$000)

OPERATIONAL NUMBERS FOR THE GAFISA GROUP   

Full-year consolidated launches totaled R$3.5 billion, a 21% decrease compared to 2010, and at the low end of annual guidance of R$3.5 to R$4.0 billion.

Throughout the year, 51 projects/phases were launched across 10 states. The Gafisa brand accounted for 61% of launches, AlphaVille comprised 28% and Tenda the remaining 11%.

Fourth quarter consolidated launches reached R$582 million, a 62% drop compared to 4Q10, reflecting the implementation of a new strategy.

Full-year consolidated pre-sales totaled R$3.4 billion, a 16% decrease compared to 2010. Sales from inventory represented 38% of the 2011 total, while units launched in 2011 accounted for the remaining 62%. Full-year sales velocity of launches reached 47.2%, or 53.9% ex-Tenda.

Fourth quarter pre-sales reached R$338 million, a 73% decline compared to 4Q10. The result is a direct consequence of the change in strategy during the second half. Excluding the dissolution of Tenda contracts no longer qualifying for bank financing, 4Q11 pre-sales would have reached R$557 million.

Fourth quarter consolidated sales velocity reached 8.3%, compared to 27.4% in 4Q10. Excluding Tenda, 4Q11 sales velocity was 17.7%, compared to 23.1% in 3Q11 and 26.4% in 4Q10. The result reflects fewer launches during the period.

The Group delivered 118 projects encompassing 22,679 units (26,868 equals Gafisa plus minority stake) with a potential sales value at company stake of R$3.7 billion during 2011, almost double the number delivered during the previous year.

GAFISA SEGMENT 

Full-year launches were stable at R$2.2 billion and included 22 projects/phases across 3 states. São Paulo and Rio de Janeiro, where the Company has robust supply chains and projects demonstrating strong profitability, accounted for more than 95% of launches in 2011. Fourth quarter launches reached R$341 million, a 59% decrease compared to 4Q10. Full-year sales velocity of Gafisa’s launches reached 51.9%, compared to 51.5% in 2010.

Nota: O VSO se refere as vendas contratadas sobre a oferta do período correspondente. Neste calculo, consideramos o estoque ajustado para refletir a correção de preço.

Full-year sales totaled R$2.2 billion, a 10% increase compared to the previous year. Sales from inventory represented 40% of the 2011 total, while the remaining 60% came from units launched during the same year. The sales velocity of launches in 2011 was stable at 51.9%, as compared to a rate of 51.5% the previous year. Fourth-quarter sales totaled R$313 million, a 50% decrease compared to 4Q10. The sales speed of Gafisa projects in 4Q11 was 13.4%, compared to 25.1% in 4Q10. The decline reflects the launch of new developments toward the end of the quarter.

Note: The VSO refers contracted sales over the corresponding period of the offer. In this calculation, we consider the stock adjusted to reflect the correct price.

Gafisa delivered 34 projects with 5,593 units and an approximate PSV of R$1.9 billion during 2011. The tables below list the products delivered in 2011:

The following table displays Gafisa Segment projects launched during 2011:

Note: The VSO refers contracted sales over the corresponding period of the offer. In this calculation, we consider the stock adjusted to reflect the correct price.

Table 11 – Gafisa Segment Land Bank

Table 12 – Gafisa Segment Contracted Sales versus Recognized Net Revenues (R$000)

ALPHAVILLE SEGMENT 

Full-year launches totaled R$972 million, a 31% increase over 2010, and included 12 projects/phases across 8 states. AlphaVille accounted for 27% of 2011 launches, up from a 16% share in 2010. AlphaVille is expected to increase its contribution to the Company’s business in future periods as demographic changes and significant investments in the country’s infrastructure make high quality suburban living more common.

Fourth quarter launches reached R$344 million, a 79% increase over 4Q10.

Full-year pre-sales reached R$842 million, a 41% increase compared to 2010. The residential lots segment accounted for 25% of consolidated pre-sales, up from a 15% share the previous year. Sales velocity of launches reached 59.7%. Sales from inventory represented 30% of the 2011 total, while the remaining 70% came from units launched during the  same year.

Fourth-quarter sales totaled R$244 million, a 27% increase over 4Q10. The sales speed of AlphaVille projects in 4Q11 remained stable at 30.1%, compared to 31.6% in 4Q10, primarily due to the success of projects launched during the period.

AlphaVille delivered 12 projects with 2,624 units and an approximate PSV of R$3.7 billion during 2011. The delivery date is based on the “delivery meeting” that takes place with customers, and not upon the physical completion, which is prior to the delivery meeting. The tables below list the products delivered in 2011:

Table 18 - AlphaVille Segment - Delivered projects (2011)

Table 19 – AlphaVille Segment - Projects Launched (2011)

Table 20 – AlphaVille Segment Land Bank

TENDA SEGMENT                                 

Full-year launches totaled R$398 million, a 75% reduction compared to 2010, and included 17 projects/phases across 8 states and the cancellation in 4Q11 of R$103 million of projects no longer feasible under the Company’s new criteria adopted in the 3Q11. No more than 30% of these projects had been completed.

This more conservative approach to Tenda’s operations led to full-year sales of R$330 million, a 77% reduction compared to 2010, in line with the reduced volume of launches. 

In keeping with a necessary change in strategy, 4Q11 gross pre-sales within Tenda also fell 55% to R$249 million. Fourth quarter net pre-sales in the low income segment were negative R$219 million, compared to R$426 million in 4Q10.  The difference reflects the dissolution of R$467 million in contracts with potential homeowners who no longer qualified for a bank mortgage due to a change in circumstance, such as lack of financial capacity, increased income, move to dual household income, cessation of employment etc. Consequently, units, which are on average more than 70% complete, will be returned to inventory and eligible for resale to qualified customers. We collected on average a down payment of 6% of the units that will be resold through financial institutions, where according to the PoC, the percentage of the incurred cost of a unit’s value is received upfront. Going forward, pre-sales recognition and the remuneration of Tenda sales force will be based on the ability to pass mortgages on to banks.

Note: 1 PoC – Percentage of completion method.