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Slow-Selling Brands Hurt Callaway

October 18, 2006|From the Associated Press

Shares of Callaway Golf Co. slumped Tuesday after the maker of golf equipment and apparel said it expected to post a wider third-quarter loss because of slow sales of its Top-Flite and Hogan brand products.

Preliminary results indicate that the company widened its loss to 17 cents to 19 cents a share in the third quarter from 7 cents a year earlier. Excluding stock option expenses and other charges, Callaway said it expected to post a per-share loss of 12 cents to 14 cents.

Analysts polled by Thomson Financial had forecast a profit of 8 cents a share.

Shares of Callaway tumbled $1.49, or 10.6%, to $12.61. The shares have been trading in a 52-week range of $11.49 to $17.42.

JPMorgan analyst Robert Samuels lowered his full-year earnings estimate to 26 cents a share from 52 cents and full-year 2007 estimate to 38 cents a share from 78 cents. His third-quarter earnings estimate fell to a loss of 17 cents a share from a profit of 4 cents, and he forecast a wider fourth-quarter loss of 24 cents a share from a previous estimate of a loss of 18 cents.

"Given that management never provided any type of sales or earnings per-share guidance, going forward we believe Callaway needs to better manage expectations," Samuels said.

Analyst Alexander Paris of Barrington Research Associates Inc. cut his rating on Callaway to "market perform" from "outperform."

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