Cannondale, American Made, but now bankrupt and taken over by ATK.
Posted on 04/13/2005 11:55:31 AM PDT by Cagey
NEW YORK (Reuters) - Harley-Davidson Inc. (HDI) on Wednesday cut its 2005 production and earnings targets and blamed bad spring weather for a 1 percent dip in first-quarter U.S. retail sales of its motorcycles, sending shares down 17 percent.
The warning overshadowed news of an 11 percent rise in quarterly earnings, and raised questions among analysts about the long-term growth outlook and strategy for Harley-Davidson.
"Management attributed the cuts to slow first-quarter sales, but we think the issue may run deeper than that," said RBC Capital analyst Ed Aaron. "We think Harley's underlying (production) growth rate is lower than either management or investors perceive."
Harley-Davidson, based in Milwaukee, said it would cut 2005 production by 10,000 shipments from its original forecast, and now targets shipment growth of 3.7 percent from a year ago.
The stock was down $9.99 at $48.78 on the New York Stock Exchange after forging the biggest fall in its history and hitting its lowest level in 15 months.
Chief Financial Officer and CEO Elect Jim Ziemer attributed the shortfall in U.S. retail motorcycle sales to weather and delayed warm spring temperatures and called the cuts a "precautionary measure."
"This action we are taking now to take out 10,000 units ... is a small adjustment to make sure we don't run into having too much carry-over product," Ziemer said in an interview. "It's not a reaction to bikes selling for less than (sticker price) or an economic concern."
Harley-Davidson has traditionally had a greater gap between supply and demand, but it has recently moved to narrow that and change the situation of the past when dealers charged more than sticker price and there were long waits for bikes.
When demand far outstripped supply in the past, small changes in the market did not cause Harley-Davidson to adjust production. But the company is more sensitive now, especially as the model year ends in two-and-a-half months, Ziemer said.
Analysts continued to seek other reasons for the productions cuts, raising questions about dealers' inventory levels and higher credit losses.
US Bancorp Piper Jaffray analyst Tony Gikas, who has a "market-perform" rating on the stock, said his checks with dealers suggested trends had been weakening for eight months.
"There is less confidence in forward bike sales, the level of dealers seeing bikes exceeding expectations is on the decline, and inventories were high," said Gikas. "Management is still overly optimistic on the longer-term opportunity ... and what the story lacked today was strategy."
For the first quarter, net income rose to $227.2 million, or 77 cents a share, from $204.6 million, or 68 cents a share, a year earlier -- topping analysts' estimates by a penny. Revenue climbed 6 percent to $1.24 billion.
During the quarter, annualized credit losses rose slightly above Harley-Davidson's target, due to a higher incidence of losses and lower recovery rates on repossessed bikes.
The company said its U.S. motorcycle retail sales fell short of its expectations, resulting in its decision to limit short-term production growth and cut its earnings growth outlook for the year to about 5 percent to 8 percent, down from its previous forecast of an increase in the mid-teens.
Analysts, on average, expected earnings before items to rise about 12 percent, according to Reuters Estimates.
Harley-Davidson cut its production target to 329,000 units, from its previous target of 339,000. That represented 3.7 percent growth from last year's 317,000 shipments rather than its previous forecast of nearly 7 percent growth. It expects almost all the production cuts to occur in the second quarter.
Ziemer, who said the company will continue to buy back shares, forecast lower second-quarter earnings from a year ago due to inefficiencies and disruptions in production.
Despite the cuts, he stood by the company's long-term unit growth projection of 7 to 9 percent, as well as its outlook for mid-teens earnings growth other than for this year even though it backed away from its 2007 target of 400,000 units.
"We are still seeing increases in demand but we are also seeing greater increases in supply," Gikas said. "I still think there are additional risks to production later this year and certainly to their outlook for 2006 and 2007."
Ted Parrish, a co-portfolio manager of Henssler Equity Fund, sold the fund's stake in Harley-Davidson earlier this month: "At this stage in the recovery, if and when consumers do decide to pullback on spending, a product considered somewhat upscale that is relying on the marginal consumer to step up to buy (it) is in jeopardy of having a slip-up like they just did."
Cannondale, American Made, but now bankrupt and taken over by ATK.
Exactly long do I got doc? I'm biker from the word go, and so far the rubber side is still down. Every day it becomes a little bit more impossible for me to die young.
Aside from a keychain, the only thing I own with the Harley name/logo on it happens to be my Harley motorcycle. It's a hell of a fine, fun bike.
When I want to go a bit faster, though, I strap on the Honda ST-1100, which has been known (in her younger days) to do a laser-measured 137mph.
I like both ends of the spectrum; we're not all tax lawyers with driveway jewelry.
"Bar hoppers and sport bikes just don't do what I want them to do."
Likewise, Cruisers are incapable of doing what I want to be able to do on a motorcycle. Most years I put between 16,000 and 22,000 miles on my sport bike. What does mileage have to do with anything?
Hmmm, I went 11 months without a car in the early 90's. I rode my Ducati on I-95 in the snow on a regular basis. I can not reccomend this sphincter tightening experience to anyone....LOL.
Would that qualify me as a "Biker"?
I hope not.
On top of all that, you see some of these machines with highly questionable frame geometry. Ground clearance? Who needs that when the thing looks soooooooo cooooool slammed down to the pavement? Watch them weep and moan when they bend their $1,500.00 controls. I remember riding a friend's 900 Sporty that had a girder that was perhaps a foot too long for my tastes. He didn't bother to alter the rake angle at all. Below 40mph, the thing was a real handful and with a bolt-on hardtail (kudos to whomever came up with that...brilliant), you didn't want to spend that much time above 40mph anyway.
Hope you didn't have to ride that duck on 95 near Bridgeport in the snow. I feel for you if you did. The wavy and warped road surface there is stressful in the sunshine.
A Commando would have been a keeper but I've been staring at a '65 Atlas under a tarp for too long.Needs a gas tank, seat, wiring and the mag MAY be shot...Interested?
Not as overpriced as a Harley.
And now the hippies who hated him turned into RUBs and ride them....
Don't tell me babyboomers can't jump on a fad!
"You just scratch your head sometimes when a machine is 85-90% quality parts but the 15% that is trash takes it all down...."
You nailed it.
I get guys who spend $10,000.00 - $15,000.00 on chrome and then open up a catalog and pick the cheapest piece of $hit set of gas tanks that money can buy. Made in China, of course... nothing is good enough for their "All American" pride and joy.
They bring these tanks to me and I ask them if they buy a new fender from Ford for their pick-up truck "do you have to lather the thing from front to back, top to bottom with body filler before you can prime it?" It's even worse if they source all of their sheetmetal from the Chi-com country. The dopes wind up spending their money to pay a body man to bondo each and every part before priming them. They SHOULD have spent their money on hi-quality parts...and YES, there ARE high quality parts available from the aftermarket sources.
I won't even get into the ego's I have to deal with in the painting department. The funniest thing is 99% of these guys are so worried about being tough guys... they're risk adverse when actually confronted with innovative ideas for paint work.
When it comes to the tough guys....The more they try to look different, the more they appear the same. Group think will do that to ya everytime.
The 1% of my high end HD and composite customers who are willing to take risks in the paint department....are the ones that make it in the magazines... and more frequently are the younger white collar guys from NYC...not your typical "bikers".
I agree with you, there are a LOT more HD's in the classfieds than there have been in YEARS... the fad is waning and HD is coming back to earth.
I don't see this as the end of HD, not even close, but it is the end of the age when they pretty much could do anything and get away with it.
Provided they manage themselves right they'll be fine....Doom and Gloom predictions are vastly over played.
Real Motorcycle? Gee I think it looks like he's trying to use that oversized carb intake to make up for his undersized......
A person could make a small fortune building custom Harleys. I know one guy who does that and his average bike sells for about 40k. He does real well and the bikes are hot.
Do you have a phallic obsession or sumpthin ?
I ride a 1983 Honda CB1000 Custom. Inline 4. Goldwing shaft drive and rear suspension, CB100F engine and front suspension. Two shift levers 1-5 Hi/Lo. Very weird....
Nope just know the difference between guys who ride to live and those that ride for show and to compensate.
When I meet one of these show bike wanna bes out in the middle of nowhere next time I decide to just go and pull a "roll me away"... I'll maybe rethink my decision... so far it hasn't happened.
There are those that ride, and those that just want to be seen.
I really don't know the big deal is about Harley anyway..
I think you mentioned 45,000 miles a year on your bike, that makes you a serious rider at the least (biker is fine if that is how you see yourself). I would venture to guess that most Harley owners trailer their bikes on an annual or semi-annual basis to some motorcycle venue/event, and put about 3,000-5,000 miles on their bikes, tops. I have many friends in the Midwest with Harley's with bikes that are 5 to 7 years old with less than 5,000 miles on them (but lots of chrome).
For perspective, I also put about 45,000 miles in a year on a motorcycle, mostly on a sportbike. As I mentioned, I have multiple motorcycles that are designed to perform in specific environments, such as on-road, off-road and dual sport.
If cruising down the road on the highway is your gig, then a cruiser is your steed. If you like to turn, accelerate, or maneuver where you must lean the bike over, you will gravitate towards more performance oriented sportbikes. If you think that Harley's are the "only" motorcycle, then you have swallowed the bait and the hook has been set IMO.
How about people who do both ? I've seen a lot of bikes on the road and Harleys are defintely the most cusomized bike on the planet. They customize real well because the V Twins look great chromed out. They are not for the guy who just wants to turn the key and go because you have to maintain them because it's an original design. But if you want a show stopping bike, buy a Harley.
Still can't figure out why Harley riders won't wave at a fellow biker unless they're on a Harley.
I've come to the conclusion that there are (at least!) 2 kinds of riders-the true wind lovers and the posturers.
The true wind-lovers don't give a crap WHAT they're riding-or,for that matter,what you're riding.They realize-and understand-the nirvana that is riding.They're the ones with the easy nature,big grins and friendly handshakes when you meet at an event.
The posturers,on the other hand, sit tall,are covered in designer leather from head to toe (with nary a weathered crease thereon),smile little if at all,and will not acknowledge you unless you look exactly like them.Oh,and one more thing-many times they come riding in to an event with their fully-overdressed rides being towed on trailers behind their SUVs.
Anyway,that's my take on it. Comments? :)
......swingarm? LOLOLOL
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