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Callaway makes huge cuts


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Originally Posted by Snakey

That time of the month?

Roughly 30 times a month when I read ignorant and racist stuff, mate.

In the race of life, always back self-interest. At least you know it's trying.

 

 

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Originally Posted by Shorty

Roughly 30 times a month when I read ignorant and racist stuff, mate.


"Chinese" isn't a race.

On my tombstone: "If this is the worst thing that ever happens to me, I'm doing just fine!"






 

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That's seems to be the case since TM is having a record year and they have a 6 month - 1 year cycle on their drivers and woods.  TM isn't making their money on putters, I'd guess that Callaway and Titleist have the lions share of that market.

Originally Posted by stogiesnbogies

It's my understanding that all the revenue is in Tee AND Green...not in between...

Drivers and Putters are the big equipment sales items ...golfers , including myself will use the same irons for years...

Every golf manufacturer deals with fake clubs.  There's just as many fake TM clubs out there as there are Callaway but somehow TM generated record revenue and profits in 2011 and Callaway lost $170M.   Callaway is losing the marketing game.  I was talking to my golf instructor who owns a pro shop, in 2013 he's cutting Adama, Cobra, and Callaway and going with Titleist, TM, Mizuno and Ping only.  He said other than Adams hybrids he can't move the other manufacturers products, and he's expecting an up year in 2013 for Titleist and Ping with their new drivers and woods which means another rough year for Callaway.

Originally Posted by Snakey

When you try to cut costs by outsourcing to China (and handing over technology and specifications to the Chinese) who promptly pass it onto their brother-in-law,cousin in the factory next door therefore flooding the market with shoddy fakes which make customers wary of anything with Callaway on it', these supposedly business genius's should slash from the top not from real working people.

Joe Paradiso

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Originally Posted by bplewis24

That's interesting.  I don't see a reason to ever replace my putter, and it's the first one I bought (Odyssey Black #6).  It doesn't even seem like a club that wears.

It wears mentally. Miss a couple of 3 footers and a lot of people think it is time for a change.

Originally Posted by Shorty

Man...what planet are you living on?????

Management usually find themselves in need of multi million dollar bonuses when they drive companies to the wall.

250 employees x 100k (good guess of cost of employee) is 25 million. Executive compenstation in 2011 was 14 million up from 6.28 million in 2010. People were getting laid off either way. Why they were not laid off in 2011 is probably the better question. Losing 171 million when your sales are in the billion dollar range is a huge misforecast. And it isn't like 2011 was a worse year than 2010 or 2009.

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Seems like Shorty was accurate in they gave themselves a bonus for performing worse than the year before.   I'm a business owner so I usually defend management comp plans, etc.  In this situations Callaway problems can be blamed directly on management.

Their customer demographic is likely older golfers who grew up during the boom days of Callaway, but a number of them are on a fixed income so they aren't buying as much equipment.  Other than Phil and Tommy Gainey I couldn't name another Callaway sponsored golfer on Tour, though I'm sure there's a few others.  Their product line is confusing, and doesn't stand out in any way to attract the younger generation who's just starting out.  In terms of golf balls I like their Tour I(s) balls but I'm the only person I know that plays them, everyone else plays Titleist.

They have to totally overhaul their products and marketing - I'd suggest they go back to their X-Series naming convention or bring in a young focus group and let them come up with a name that's like RBZ or AMP, something that will either relate back to their good years or something fresh and exciting.  A few more years like 2011 and they will be history.

Originally Posted by x129

250 employees x 100k (good guess of cost of employee) is 25 million. Executive compenstation in 2011 was 14 million up from 6.28 million in 2010. People were getting laid off either way. Why they were not laid off in 2011 is probably the better question. Losing 171 million when your sales are in the billion dollar range is a huge misforecast. And it isn't like 2011 was a worse year than 2010 or 2009.

Joe Paradiso

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Originally Posted by newtogolf

In terms of golf balls I like their Tour I(s) balls but I'm the only person I know that plays them, everyone else plays Titleist.

I also play Callaway balls.  I purchase Callaway tour balls exclusively, but even though I started out as a Callaway fanboy when I first started purchasing equipment 4 years ago, their balls are the only thing I currently put in play.  I've replaced the 3w, irons, and wedges that I used to have with Ping, Mizuno and Mizuno, respectively.

Brandon a.k.a. Tony Stark

-------------------------

The Fastest Flip in the West

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Originally Posted by DirtCheap

"Chinese" isn't a race.

You have got to be kidding.

So you are saying that because they are "Chinese Mongoloid" it is not possible to make  a discriminatory comment about the "Chinese" - as if people will be confused? Wake up.

Go and put an ad in the paper saying you won't employ Chinese people because they are dishonest and see if the term "racist" doesn't appear at some time in your future.

People call me pedantic. You aren't even right. Effing hell.

In the race of life, always back self-interest. At least you know it's trying.

 

 

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Callaway is really no different than most others in the golf industry. Without searching the web, pick out a manufacturer other than TaylorMade and try to think what their different lines of clubs are. TaylorMade got lucky with the gimmick to paint their woods white. They've milked that gimmick for awhile now, leaving the RBZ (or is it Rocketballs?) clubs white. But that, too, will run its course and they'll find themselves in the same boat as other manufacturers -- fighting for the increased share of a dwindling market. I think the younger generation is reserving their scarce funds for more tattoos and piercings than that new offering from ? manufacturer.

Too me, Callaway is on the front line of a huge problem -- the US economy. It's been reported repeatedly that corporations are in a holding pattern, awaiting the right time to reinvest huge sums of cash they've had on-hand for several years. I'm no accountant, but I'd bet Callaway has bunches of actual, securely-held cash, that it too is willing to invest in new product designs if the political climate changes. With market share currently down (all industries suffer trends), what incentive do they have to try something new now? Cutting back will get them through the end of the year, but then what?

If the current regimes in the legislative branch -- and more importantly, the executive -- do not change, then there will be an insurmountable number of corporations fleeing to other countries. And they'll do it soon, while the American dollar still has enough worldwide value and integrity. If they can't find foreign buyers, then owners and investors will pull the golden parachute cord, spend what they can of the money while they can, and convert the rest to gold for storage in a well-fortified vault. Who can blame them? I'd do the same thing. Self-interest doesn't make you selfish, just rationally careful.

If our nation's political landscape does not change, then all recreational luxuries -- such as golf -- will continue to disappear at depressing rates. How many courses and clubs in your area are struggling or have closed?

I don't like making this political, or so serious, but the reality is harsh. It's possible, by the end of the year, the only thing a golf club might be good for is whacking zombies as they try to enter your home for the last Pop Tart in your pantry. At that point, whether that weapon is a Callaway or a TaylorMade won't matter much.

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Originally Posted by DelusionalHookr

If the current regimes in the legislative branch -- and more importantly, the executive -- do not change, then there will be an insurmountable number of corporations fleeing to other countries. And they'll do it soon, while the American dollar still has enough worldwide value and integrity. If they can't find foreign buyers, then owners and investors will pull the golden parachute cord, spend what they can of the money while they can, and convert the rest to gold for storage in a well-fortified vault. Who can blame them? I'd do the same thing. Self-interest doesn't make you selfish, just rationally careful.


That was very well said.. I'm stealing that for a FaceBook update.

On my tombstone: "If this is the worst thing that ever happens to me, I'm doing just fine!"






 

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I was doing some shopping today and the wife,  and we ran into Dicks Sporting goods.  While she was looking for some new workout clothes... I was busy looking at clubs and apparel.

I walked by the Callaway RAZR Fit drivers and they were all marked down $100 from $399 to $299.  Beside the Callaway clubs were the TaylorMade's.  The TaylorMade R11S was marked down from $399 to $349.  So TaylorMade is selling their driver for a $50 premium over Callaway.  Pretty much sums it up folks.

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Accountability is the principle of good executives, especially leaders.  Management 101 ... get your largest expense cut from releasing middle management positions, while cutting the fewest jobs .

These are usually the ones who made the decisions increasing costs far beyond revenue projections.  Usually the ones arriving latest at the office daily and leaving the earliest.  Check this out, have them clock like the other employees as a way to check hours versus $$ paid.  No limits as to duration of this action,  just until you, as CEO are satisfied.  You will feel better about your decisions to cut positions.

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Quote:

Callaway Golf Company Income Statement

Dec 11 Dec 10 Dec 09
Revenue 886.5 967.7 950.8
Cost of Goods Sold 575.2 602.2 607.0
Gross Profit 311.3 365.5 343.8
Gross Profit Margin 35.1% 37.8% 36.2%
SG&A; Expense 358.1 348.2 342.1
Depreciation & Amortization 38.6 40.9 40.7
Operating Income (81.1) (26.6) (30.5)
Operating Margin -9.1% -2.7% -3.2%
Nonoperating Income (8.1) (11.0) 0.0
Nonoperating Expenses (1.1) 2.0 0.9
Income Before Taxes (90.3) (35.6) (29.6)
Income Taxes 81.6 (16.8) (14.3)
Net Income After Taxes (171.8) (18.8) (15.3)
Continuing Operations (171.8) (18.8) (15.3)
Discontinued Operations -- -- --
Total Operations (171.8) (18.8) (15.3)
Total Net Income (171.8) (18.8) (15.3)
Net Profit Margin -19.4% -1.9% -1.6%
Diluted EPS from Total Net Income (2.82) (0.46) (0.33)
Dividends per Share 0.04 0.04 0.10

Callaway has a poor operating levarage.

They did not lower the cost of goods sold  ( % to Rev ) when the revenue is down  ,65%  to Rev in 2011 vs. 62% to Rev in 2010

SG&A; does not scale down infact grow in % compare to Rev , from 36% to Rev in 2009 to 40% to REv in 2011 .

What I Play:
913D3 9.5°Diamana Kai'li 70 Stiff  "C3" | 910F 15°, Diamana Kai'li 80 Stiff "D2" | 910H 19°,  Diamana Kai'li for Titleist 85 Hybrid Stiff | Titleist 714 AP2 4 to P Aerotech Steelfiber i110 S | SM4 Vokey 50.12, 54.14 & SM5 60.11K| 34" Edel Umpqua + 40g Counter Weight
 
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You might want to cut back on right wing talk shows. You are crossing over into the paranoid delusional realm.  Sure it will suck if we elect a government that craters our economy by trying austerity measures (see europe for examples of how well that works) during a recession but none of that really is what did in callaway in 2011.  This isn't year one of the recession. It has been going on since 2008. Heck the golf business has actually been rebounding off the lows in 2012.  Unfortunately companies rarely break down sales in detail but I am guessing the razr hawk was a flop sales wise. People were not willing to pay 400 bucks for a nonadjustable driver in 2011. The uPro gps recall didn't help. And the fact that the balls were on sale all year suggests a huge oversupply/lack of demand. I am also guessing the ceo leaving resulted in a bunch of the executive compensation increases and the resulting turmoil tends to hurt performance in my experience.

Quote:

Originally Posted by DelusionalHookr

Callaway is really no different than most others in the golf industry. Without searching the web, pick out a manufacturer other than TaylorMade and try to think what their different lines of clubs are. TaylorMade got lucky with the gimmick to paint their woods white. They've milked that gimmick for awhile now, leaving the RBZ (or is it Rocketballs?) clubs white. But that, too, will run its course and they'll find themselves in the same boat as other manufacturers -- fighting for the increased share of a dwindling market. I think the younger generation is reserving their scarce funds for more tattoos and piercings than that new offering from ? manufacturer.

Too me, Callaway is on the front line of a huge problem -- the US economy. It's been reported repeatedly that corporations are in a holding pattern, awaiting the right time to reinvest huge sums of cash they've had on-hand for several years. I'm no accountant, but I'd bet Callaway has bunches of actual, securely-held cash, that it too is willing to invest in new product designs if the political climate changes. With market share currently down (all industries suffer trends), what incentive do they have to try something new now? Cutting back will get them through the end of the year, but then what?

If the current regimes in the legislative branch -- and more importantly, the executive -- do not change, then there will be an insurmountable number of corporations fleeing to other countries. And they'll do it soon, while the American dollar still has enough worldwide value and integrity. If they can't find foreign buyers, then owners and investors will pull the golden parachute cord, spend what they can of the money while they can, and convert the rest to gold for storage in a well-fortified vault. Who can blame them? I'd do the same thing. Self-interest doesn't make you selfish, just rationally careful.

If our nation's political landscape does not change, then all recreational luxuries -- such as golf -- will continue to disappear at depressing rates. How many courses and clubs in your area are struggling or have closed?

I don't like making this political, or so serious, but the reality is harsh. It's possible, by the end of the year, the only thing a golf club might be good for is whacking zombies as they try to enter your home for the last Pop Tart in your pantry. At that point, whether that weapon is a Callaway or a TaylorMade won't matter much.

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Originally Posted by inthehole

Honestly, I think the name of their clubs alienates alot more people than they banked on.     I won't play a driver called diablo, and imagine I'm not the only one.      Food for thought Calloway ...


Really?  What about the name makes you not want to play it?  I'm not saying it's the greatest name, but it's better than Rocketballz.   Most people still play them.

In my bag:
Driver - Diablo Octane 10.5*
Fairway Wood - Diablo Octane 15*
Hybrid -  Edge 21*
Irons - X20's 4I - 9I
Wedges - X20's PW/SW
Putter - White Ice 1
Ball - Warbird
 

 

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Without having a political debate Delusional is correct about some companies having huge amounts of cash saved up. They don't want to dump the cash back into an unstable economy since it is better served as a safety net at the moment. Now I don't think Callaway is one of those companies but I do know they lack one thing most other golf manufacturers have, a very stable parent company. TM, Titleist, Cobra, and now Adams all have very large money making parent companies that allow them to carry a bigger marketing budget and probably bigger budgets all around. They don't have a following like Ping so I'd probably say Callaway's best chances on survival sit with Under Armour. UA is basically the last sports apparel company without a full golf division and I know they had interest when Acushnet was available. Callaway still makes some good stuff and odyssey is still a solid line so they have some value to the right buyer but it would be an entire image make over ala Puma/Cobra.

Driver: i15, 3 wood: G10, Hybrid: Nickent 4dx, Irons: Ping s57, Wedges: Mizuno MPT 52, 56, 60, Putter: XG #9 
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Originally Posted by JerryTimes

Really?  What about the name makes you not want to play it?  I'm not saying it's the greatest name, but it's better than Rocketballz.   Most people still play them.

Agreed. I've never looked at a club "name" and based a purchase off of it. for me, its all about how much im willing to spend, and how it feels on the practice tee.

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Originally Posted by inthehole

Honestly, I think the name of their clubs alienates alot more people than they banked on.     I won't play a driver called diablo, and imagine I'm not the only one.      Food for thought Calloway ...

Really?  Coming from a guy playing a Sumo...

  • Upvote 1

Driver:  :callaway: Diablo Octane
Fairway Wood:   :adams: Speedline 3W
Hybrid:   adams.gif A7OS 3 Hybrid 
Irons:   :callaway:  2004 Big Bertha 4-LW

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12% is a relatively small number if the the cut is spread across the board. I would have started with a 5% wage cut for all employees. This would entice many to move on of their own accord, long time employees may have seen that kinda of move as a push into retirement, again higher waged employees would have left. As stated above though, the highest earning people in management should have taken the brunt of the pay cuts and firings due to mismanagement of the company.

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Note: This thread is 4267 days old. We appreciate that you found this thread instead of starting a new one, but if you plan to post here please make sure it's still relevant. If not, please start a new topic. Thank you!

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