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Callaway Chief Resigns Under Pressure

August 03, 2004|From Reuters

Callaway Golf Co. Chairman and Chief Executive Ron Drapeau abruptly resigned Monday, stepping down under board pressure after the golf equipment maker's profits shriveled over the last year.

The Carlsbad, Calif.-based company, known for its Big Bertha line of clubs, said William Baker would assume the role of interim chairman and CEO.

Baker, 71, is Callaway's longest-tenured board member and has led three publicly traded companies as chief executive, Callaway said.

The company did not give a reason for Drapeau's departure. But the golf equipment maker has seen its high-margin woods business drop in the face of competition from lower-priced models from rivals like TaylorMade.

"Mr. Baker has successfully led corporate transitions in the past, and the board has the utmost confidence that this practical, hands-on experience will enable him to effectively lead the company through this period," Ronald Beard, Callaway's lead independent director, said in a statement.

Drapeau was the hand-picked successor to company founder Ely Callaway and took over as chief executive in June 2001, a month before Callaway died of cancer.

Drapeau came under pressure after a string of weak financial results marked by shrinking profits in three of the last four quarters and a wider loss for the fourth quarter of 2003 on charges related to its purchase of golf ball maker Top-Flite.

The poor performance has also sliced into the company's share price with Callaway's stock closing at $11 on Monday, down 29% from a year earlier. Drapeau's departure was announced after the market closed.

Callaway last month reported a 60% decline in second-quarter earnings from a year earlier, partly because of one-time charges related to its Top-Flite golf ball operations.

Those results followed Callaway's decision in June to cut its revenue and profit forecasts for the second quarter and all of 2004 because of declining titanium driver sales.

The company also cited a continuing drop in its business in Japan and a bigger-than- expected loss at Top-Flite as reasons for its lowered 2004 outlook.

Callaway bought Top-Flite last year to try to turn around its own unprofitable golf ball business.

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