Callaway Cuts Forecasts as Titanium Driver Sales Fall

Callaway Golf Co. sliced its second-quarter and full-year 2004 revenue and profit outlook Tuesday because of declining titanium driver sales.

The Carlsbad, Calif.-based company also cited a continuing drop in its Japanese business and a bigger-than-expected loss in its Top-Flite operation as reasons for the lowered forecast. Callaway bought Top-Flite last year in a bid to turn around its own unprofitable golf ball business.

“We are disappointed with the message we had to deliver, but I can assure we are working diligently to turn it around,” Chief Executive Ron Drapeau said during a conference call with investors and analysts.

The warning, released after the close of regular trading, sent Callaway’s shares down 21% after hours, to $11.80. The stock earlier had closed at $14.94, down 6 cents, on the New York Stock Exchange.

The company said it now expected second-quarter earnings of 10 cents to 14 cents a share, including Top-Flite integration charges of about 9 cents a share. Analysts had expected 60 cents a share, exclusive of charges.

For the year, Callaway said it expected to earn 15 cents to 25 cents a share, including integration charges of 25 cents a share. Analysts had forecast a full-year profit of $1.22 a share, excluding the charges.

Competition cut into the firm’s high-margin woods business, particularly the company’s Big Bertha titanium drivers, Drapeau said.