Callaway Golf announced that it will implement several
significant cost saving moves, including reducing its work
force by 24%, or approximately 700 jobs. Callaway will also
consolidate the operations of subsidiary Odyssey Golf; as
well as discontinue its involvement with interactive golf
sites, golf book publishing and driving range ventures
(Callaway). Callaway Chair & CEO Ely Callaway said that
"more than half" of the 700 layoffs "are occurring in
manufacturing, although nearly all areas of the company were
affected." Callaway said that each laid-off employee "will
receive a minimum of two months severance pay and counseling
to help them get through the unemployment process and find
new jobs." Callaway also said that the company will
"continue to sponsor its extensive stable of pro golfers,"
as well as featuring celebrities like Bill Gates and Celine
Dion in ads, saying the spots "don't cost Callaway that
much." The company will sell its Golf Centers at Walt
Disney World, Las Vegas and Pebble Beach, as well as ending
its sponsorship of NIKE Junior Golf Camps and Adult Golf
Schools. Callaway: "We're going to concentrate our
activities very, very strongly on the research and
development of new products." Callaway stock dropped $0.12
yesterday, closing at $10.75 a share on the NYSE, as 939,200
shares were traded -- "almost double" the company's recent
average volume (SAN DIEGO UNION-TRIBUNE, 11/12).
A DIVOT FOR ELY: Ely Callaway was interviewed on CNBC:
"We're aiming to do a better job for the future ... by
focusing on the one thing we know best, and that is making
and selling exceptional golf clubs and then in the future,
adding golf balls to that" ("Business Center," CNBC, 11/11).
Callaway will "focus its energies on its Big Bertha golf
club line, its Odyssey putters and its emerging golf ball
business." Callaway expects to sell its Las Vegas golf
center for about $10M. The company expects to save "about"
$40M from the cuts, and despite the expected loss, "won't
cut back on the more than $60 million it spends yearly on
golf tournament prizes and marketing" (N.Y. POST, 11/12).
REASONS? Ely Callaway "blamed the company's problems on
the soft economy." Callaway: "It caught us by surprise. We
were not smart enough to predict our loss of business in
Asia." Callaway also cited competition "from companies that
cut prices to compete" (USA TODAY, 11/12).
