My first clubs were Hogan's. Producer's, if I remember right.
I had a paper route, and the money I'd saved (or rather my mother saved for me) that first year, paid for a brand new set of Hogan's.
Those clubs are long gone, and are either being put to good use, or rusting in someones basement.
The same thing is going on at Callaway.
This morning, Callaway (ELY) reported its '06 year results. The company is doing really well with it's high net worth brands Callaway/Odyssey...but are failing miserably with the Joe Bag-o-Doughnuts Top-Flite/Hogan brands.
Remember '03? It's when ELY bought the remaining assets of bankrupt Top-Flite. The major assets included the ball maker Top Flite, the Ben Hogan company, and all its facilities.
At the time it seemed like a major coup. And the stock price felt old-man Ely's enthusiasm, going from $10-$15 in 6 months. Nothing like a brand new acquisition to get the fires burning!
But sadly, like driving for show...you to putt for dough.
And dough they haven't made....and as of this morning's year end results... for 3 years. ELY is taking another write-down of assets (um...that means investors get screwed) to account for restructuring initiatives (um...that means they fired a bunch of high-paid executives and paid them even more to leave) at the Top Flite/Hogan facilities.
As a stock market geek, I love reading some of these reports (I think you'd like them too...they can be hilarious (or frightful) at times...go to http://www.footnoted.org/ to see what I mean).
Basically, the ELY report talks about the new Top-Flite initiative, which (after seeing that sales declined again...last year 31% for the Top-Flite/Hogan brands) seems like the initiative would be to eliminate the Top-Flite/Hogan brand either by spinning it off as a private company or canning the brand completely and using the facilities for a Callaway/Odyssey brand expansion. Either way...I believe it's the beginning of the end for the TopFlite/Hogan brands.
ELY is tired of margin squeeze...they see their sales growth of products that cater to high net worth people bringing high margins (Callaway/Odyssey brands)...get pummeled by their products that cater to everyone else (Top Flite/Hogan), because they come with low margins, and uncertainties of spending habits with the economy. ELY's growth projections have more up-and-downs that Tiger Woods on his home course.
So I think ELY's latest initiative...that comes with Top Flite/Hogan brand roll outs and promotions...is more of "fitting the ugly princess with pretty shoes and a gown", and trying to gussy-up the old brand to make it attractive for a private equity firm.
I wonder what will happen to the brand...will the Hogan's be put up for sale one more time to be put to good use.
Or will they end up in a cobweb-filled corner of Callaway's basement, rusting.
Thanks for reading. Keep it in the short-grass,
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