Callaway Issues Warnings for Third Quarter, Year

Callaway Golf Co. appeared to be nearing the rough after warning Thursday that its third-quarter and full-year revenue and profit will fall short of targets.

Sales of its new titanium driver, it said, may not offset softness in the golf equipment business.

Citing weak consumer spending in the United States, Japan and elsewhere, Callaway sees third-quarter sales of $155 million to $160 million and earnings per diluted share of 13 cents to 15 cents. For the year, Callaway expects sales of $750 million to $760 million and per-share earnings of 85 cents to 90 cents.

The Carlsbad, Calif.-based firm’s third-quarter and full-year results will include a reversal of about $17 million of warranty reserves pursuant to a review announced and begun by the company in July. That was partially offset by inventory reserves of about $3 million on ERC II and Big Bertha C4 premium drivers.

Analysts polled by Thomson First Call had expected a quarterly profit of 20 cents a share on revenue of $193.2 million.

For 2002, analysts’ average forecasts call for the golf equipment maker to earn $1.09 a share on total sales of $812.3 million. In 2001, Callaway earned $1.02 on total revenue of $816.2 million.

Callaway shares Thursday rose 24 cents to $13.44 on the New York Stock Exchange before the news was announced.