Callaway interim CEO seeks to regain market share

Callaway Golf’s new interim president and CEO, Anthony Thornley,

said Thursday that the golf equipment maker will put some savings

from planned job cuts toward boosting marketing spending and

gaining back market share.

Callaway Golf Co. has suffered losses as the golfing industry

has been slow to rebound after the recession. Late Wednesday, the

Carlsbad, Calif.-based company announced layoffs in an effort to

cut pretax costs by $50 million, said CEO George Fellows would step

down and issued a weak forecast for the second quarter. It said it

must take ”immediate and aggressive actions” to return to

profitability.

In a conference call with analysts on Thursday, Chairman Ron

Beard said Fellows, 68, resigned after six years at the helm for

personal reasons, partly including the cross-country commute to his

family’s home in New York. The board felt Thornley, who has sat on

Callaway’s board since 2004, was a ”natural choice” to lead the

business until the company can conduct a search for a permanent

CEO.

”It is the board’s view that the company’s performance is not

at all what we want it to be and Tony’s charge is to lead the next

steps in the efforts to improve the results that we deliver to

shareholders,” Beard said. Describing the 65-year-old Thornley as

an ”avid golfer” with a handicap in the low single-digits, Beard

said the board believes that he has a ”passion for our sport and

for this company and that he has the skills and discipline that

Callaway needs as it takes its next steps forward.”

Thornley, a former president and chief operating officer of

wireless tech company Qualcomm Inc., noted that Callaway’s rivals

have been investing considerable sums on media advertising and tour

expenses and that’s hurt Callaway’s business. He said the company

will look to boost marketing spending to better attract

customers.

”While it is clear that it was the global economic recession

that derailed our record sales and earnings pace, it is also clear

that our business is not keeping pace with the industry recovery,”

said Thornley. ”While we have the best performing products in the

industry, that message has sometimes been overshadowed by the sheer

volume of competitive marketing. In addition, the actions we are

announcing today will also result in a leaner organization that is

better able to respond to changing market conditions.”

Thornley said job cuts will take place at all levels of the

organization. The projected cost savings will reduce operating

costs and allow the company to redeploy some funds toward its core

business. The number of jobs to be eliminated wasn’t disclosed. The

company expects to give more details on the reorganization when it

reports quarterly results in late July.

Callaway forecast a loss of $55 million for the second quarter,

including a $46 million charge related to deferred tax assets and

an $8 million charge on the job cuts, and revenue of $270 million.

That’s well below the $307.1 million in revenue expected by

analysts, according to FactSet.

KeyBank Capital Markets analyst Lisa Brozewicz called the

forecast ”disappointing,” but believes the management change is

positive for Callaway.

”The interim CEO appears to be taking necessary actions to

return the organization to profitability,” she wrote in a note to

clients.

Callaway shares fell near its 52-week low of $5.80 during

Thursday’s regular session, before paring some losses and closing

down 11 cents at $6.22.