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Web Street Golf Report

VOLUME 12, NUMBER 7

Monday, February 16, 2009

WHAT’S IN STORE??? Longitudes Group has completed a new report for 2009 documenting the market profiles of the 22 largest off-course golf retail brands. The report measures a number of variables for those golf retail brands with five or more stores conducting business in the US market. The report compares and contrasts the brands, and relates how each retail chain impacts the local markets in which they compete.  Sara Killeen, President of Longitudes Group, forecasts in 2009, “We’ll see continued contraction and consolidation this year as the larger retail brands close under-performing stores, tightly manage inventories, conserve cash and re-focus on their best customers.”

Among some of the published findings in the research is that size matters. Longitudes said there are 22 retail chain store brands collectively that control 644 store locations or 44% of all the doors in the US marketplace. The balance, 808 retailers, represents those with fewer than four locations. The sample of chains studied represent 65% of all off-course square feet while serving 57% of the US golf population. New York Golf Center, due to its location with stores in densely populated Manhattan and the New York area, represents the highest number of golfers per store at 84,000 golfers; nearly double the next major competitor, according to the research findings.

“2009 will continue to be extremely challenging for both small and large retailers alike. Since 2004, there has been a 15% expansion in the total square feet in the off-course golf market,” Killeen remarked. “Brands that extended their reach into certain retail trade areas, are now realizing that wasn’t a good idea.”

The retail brands included in the report are:

Austad's Golf Stores

Bobby Jones Golf

Boyne Country Sports

Edwin Watts

Golf Discount

Golf Etc

Golf Galaxy

Golf Headquarters

Golf USA

Golfers' Warehouse

Golfsmith

Las Vegas Golf & Tennis

Nevada Bob's

New York Golf Center

PGA Tour Shop

PGA Tour Superstore

Pro Golf Discount

Roger Dunn

Special Tee Golf

Tee To Green

The Golf Mart

Van's Golf Shops

In the overall off-course retail segment, the last eight years large format retailers have aggressively employed an open door policy by expanding stores across the country, putting many smaller stores out of business.  These ‘Big Box’ stores have slowed or even stopped their growth this last year due to the economy. According to the Longitudes Group, the Big Box brands still represent 21% of all stores, and 59% of all retail space in the channel. Since 2005, the off-course market has experienced a net loss of 332 doors, it reported.  The report is affordably priced at $275 per copy through Longitudes Group website, www.longitudesgroup.com/reports.

PRICE CHECK! Nike Golf has adjusted the pricing of its recently introduced STR8 FIT adjustable driver. Even though it has yet to be delivered to retailer accounts, the new minimum advertised price has been lowered to $399.99. The original manufacturer’s suggested retail price was $540.00 when Nike announced the STR8 FIT late last year.

According to the company, the basis for the change is a reflection of recognizing the pressures of the driver market as well as today’s economy. The company has moved up its official market delivery date for accounts that committed in the early fall run, to March 20. Accounts that elected a later delivery date of the product will not be required to change.

 


 

HIT ME ONE MORE TIME: Its only February and outside of the sun belt in the United States, its still unknown when recreational golf will come on line this year. The economy continues to be the story and many stakeholders within the golf industry are more than a little curious how courses and retail shops will be supported once old man winter departs. It’s unknown how the latest stimulus intervention will alter the present course or when it might begin to be felt, adding to the intrigue of what may be around the corner.

It appears Callaway Golf has generated a bail out plan of its own as the retail price on its FT-i and FT-5 drivers have been cut down to $199. The company’s Hyper X, introduced last year is also residing at $199. However, it is interesting to note Callaway’s FT-i Squareway fairway wood is maintaining its price of $299.

JUST DO IT! Nike, Inc. is restructuring its business. The company said it intends to realign its businesses throughout the organization and may result in an overall reduction of up to four percent of the company’s workforce. The Beaverton, OR., behemoth employs nearly 35,000 people worldwide.

“The power of the Nike brand and the diversity of the Nike portfolio continue to be a competitive strength,” stated Mark Parker, President and CEO of NIKE, Inc. “In light of the current economic climate, it is more essential than ever to sharpen our focus on the consumer to maximize opportunities for product innovation and brand management in the marketplace. The decision to reduce our workforce is a difficult one, but it will put our business in the strongest position possible to continue to deliver long-term profitability and growth.”

As part of this effort, the company will review its entire supply chain from the sourcing base to the retail footprint to ensure it is in the best position to bring elevated consumer experiences to market. It anticipates completing the review of its organization by the end of the current fiscal year. The exact number, timing and location of positions expected to be eliminated will not be known until the review is completed and employee representative bodies have been consulted within accordance with local legal requirements. No word on how or to what extent this will be felt within Nike Golf.

K.I.S.S.: In these demanding economic times, golf in general may find itself put to the ultimate test. The peak of the pyramid, the PGA Tour, is insulated in 2009, but everything else looks to be fair game. Golf has often been associated with an affluent consumer. The hard costs associated with playing are expensive even during times when money was easier to come by. The days of spending $500 for a new wonder club or several hundred to play a once in a lifetime venue isn’t quite as vibrant on a mass application as days gone by. At present, it seems everything in life is being second-guessed on cost and the chances of finding an affordable alternative often seems remote.

However, one company has found it doesn’t need to charge an outrageous premium for its products simply due to its involvement in golf. For many years and product cycles, golfers have eagerly accepted a potential plug and play application as an absolute means towards improve. Shelling out a lot of money on equipment or training aids has been the standard operating procedure many consumers and companies have subscribed to. In the end, the fix is often temporary and leads to the exercise becoming repetitive as well as redundant. One theme that has become popular with equipment companies and golf consumers is visible technology. In other words: Seeing is believing.

NURU, based in Salt Lake City, UT., has a company stated mission to provide portable, performance-enhancing knowledge to the masses. It takes information and makes it more understandable and actionable, using language and illustrations (i.e. visual technology) that everyone can understand. Then, it puts that knowledge on simple, portable media that can be taken and used anywhere. We’ve all heard the notion that practice makes perfect. Often times in golf, practice at the recreational level is an exercise in polishing bad habits. NURU has created a variety of products to help players from lag putting to chipping with a specific target in mind or alignment from tee shots to iron play. The company’s VIZ Kit contains training aids that can immediately influence a player’s practice habits in all aspects of their game regardless of whether someone is a high handicapper or an accomplished player. “Our goal in creating and packaging the NURU Viz Kit was to stay simple and effective,” explained Scott Warner, the company’s lead inventor and CEO. Warner isn’t new to golf. He formerly developed a variety of innovative golf products for Ogio International. “Each tool focuses on the fundamentals that every renowned golf coach emphasizes. And with a retail price of just $39.99, we’ve removed any barriers to entry for the average golfer.”

NURU Golf was just named Preferred Supplier of Training Aids to The First Tee and recently attended the PGA Merchandise Show in Orlando where its believed the company sold 350-400 Nuru Viz Kit samples and took orders for more than 100,000 units. "We saw a real need for a portable low-cost, simple package of training aids, and the response at the Show has been overwhelmingly positive. PGA Professionals have purchased a kit for their entire membership and golf academy directors want one for every student. Everyone who stopped by the booth was blown away by the Nuru training aids."

The NURU Viz Kit features five training tools that target every aspect of a golfer’s game from chipping and putting, to balance, power and accuracy. The company also has created 30 compact cards. Each one contain a practice drill to improve balance, power, accuracy, swing mechanics, chipping, putting, and more for individuals who are looking for assistance with ways to leverage their practice time. The company products are available at www.nuruplanet.com. All items include free shipping. For anyone interested in buying large quantities (tournament giveaways, junior clinics, etc.), contact the company directly at 866-665-NURU (6878).

DOUBLE DIGIT DROP: Ingersoll-Rand Company Limited (IR: NYSE), a leading diversified industrial firm, reported its fourth quarter operating results last week. Among its holdings is Club Car, which said its revenues declined by 22% compared with strong results in the fourth quarter of 2007 due to sluggish golf and consumer markets in the United States. The company did not provide specific revenues for its Club Car business, which is included in its reporting under the Industrial Technologies segment.

THE BUCK STOPS HERE: In a recent Securities and Exchange Commission filing, Callaway Golf (ELY: NYSE) revealed it has suspended matching contributions for all of its employees with respect to its 401(k) retirement investment plan for 2009. “We're taking a very, very hard look at our cost structure, not just from a product point of view, but also various support levels and, generally speaking, have taken a very conservative view on spending categories that we believe are more flexible,” said George Fellows, President and CEO. “But things such as Travel and T&E and a lot of the administrative expenses that we think we have some flex in, we've taken pretty hard cuts at. We have frozen salaries for next year. We have suspended 401(k) matching programs. We've essentially, although not completely frozen hiring, to the extent that we don't have critical positions that we need to fill.

“There are many, many areas on a worldwide basis that we took a very hard look at and we believe the net combination of those things will allow us to function quite comfortably through the year and still allow us to support the businesses as we feel they need to be. And so, we're not giving you any specific numbers because we can't at this point. We think we've clawed back a reasonable amount to try to offset some of the FX (foreign exchange) issues.”

FOOLS GOLD? The Arizona Republic reported the Apache Gold Casino Resort east of Globe, AZ., has temporarily closed its golf, discontinued keno games and laid off 9 percent of its workforce in response to the worsening economy.

Once thought to be recession-proof, Arizona's 23 Indian casinos saw a combined revenue drop of 16 percent in the fourth quarter of 2008, the paper reported. The first quarter of 2009 thus far, has shown no improvement. The moves were expressed as prudent business decision intended to contain costs and maximize revenue.

General Manager Scott Wilson told the Republic, the resort's Stronghold Golf Club, Entertainment Pavilion and keno operation did not have the draw needed to justify their continued operation. There are hopes to reopen the golf course in 30 to 60 days, but no plans to reinstate Keno games. "Keno is a dying game," Apache Gold spokesman David Peters told the paper. "It has been on the way out for some time."

SHORT SHOTS: Callaway Golf has introduced a new set of X-Forged Wedges. Built with forged 1020 carbon steel and its trademark “Mack Daddy Grooves” along with its C-Grind, a popular grind on tour, relieves the heel, toe and trailing edge, the wedges are available in twelve loft/bounce angle combinations. “Nothing provides more confidence than the beautiful lines and soft feel of forged carbon steel we offer in these X-Forged Wedges,” stated Roger Cleveland, Chief Designer, Research and Development, Callaway Golf.

The new product is available in two finishes:  White Chrome or New Vintage and introduction retail price (vintage/chrome) of  $119/$109.

PUTTING FOR DOUGH: Odyssey has introduced the Black Series i 2-Ball, extending its popular 2-Ball alignment series of putters. The latest from the company combines a precision milled head, according to Odyssey, for optimal balanced weighting with a rich, nickel-plated finish that reduces glare. It is built with a 1025 carbon steel body and a weighted tungsten flange to influence a low center of gravity. Tour insert, the company said features a highly resilient elastomer core to promote an enhanced feel.

“For golfers demanding the best in performance, precision and craftsmanship, Black Series i Putters are designed with multi-material construction, featuring a multi-layer Tour insert that provides premium feel and responsiveness,” said Austie Rollinson, Principal Designer at Odyssey. The Black Series i 2-Ball will retail for $299

Continuing on its 2-ball theme is the White Hot XG 2-Ball F7. According to the company, the weighted F7 wings on it raises the moment of inertia or resistance to twisting by more than 40% than the original 2-Ball putter introduced in 2001. The F7 uses a multi-layer insert and carries a retail price of $169.

Staying on the winged them for a minute, the White Hot XG Teron, named after the Greek word for “wing,” offers a Modified Hi-Def Alignment System, odyssey said, that features two alignment stripes running on both the top-center and outer wings of the putter head.  The high-density alignment wings create incredible stability, Odyssey promised. “Inspired by high-performance, multi-layer golf ball technology, the White Hot XG insert takes two materials with different properties and combines them to take the level of feedback and feel to an all-new high,” remarked Rollinson. The White Hot XG Teron is priced at $169.

SHOP TIL YOU DROP ... PLEASE: Shopatron, a provider of eCommerce opportunities has added Nickent Golf to its vendor list. Authorized Nickent Golf retailers can enroll in the program at no cost and view and fill orders placed through the Nickent Golf Web site. Whenever someone places an order for either in-store pickup or home delivery, it is awarded to the closest stocking Nickent retailer participating with Shopatron.

"With this solution, consumers can research and purchase Nickent Golf products online in a branded environment while we build business for our retailers." said Dave Burningham, Senior Director of Sales for Nickent Golf. "At the same time, we build brand equity for Nickent Golf, by using the Shopatron System." Nickent Golf is rolling out the Shopatron system to all of its retailers this month.

FORE MORE YEARS: The Travelers Companies has extended its relationship with golf. The property casualty insurer has agreed to sponsor the Travelers Championship by four years, through 2014. Its original four-year agreement was through 2010.

“Our sponsorship of the Travelers Championship has been a great investment for our business and the community, and we’re excited to extend our partnership with the PGA Tour through 2014,” said Jay Fishman, Chairman and CEO of Travelers. “The Travelers Championship provides a tremendous opportunity to support the community and continue raising significant funds for local charities. It’s been an important part of the sports history in Connecticut and we’re committed as ever to help make it a first-rate event for players, sponsors and the fans.” Financial details of the agreement were not revealed.

IT’S IN THE BAG: Fred Couples has signed on with the bag manufacturer, Ogio to endorse its line of golf travel gear. In addition, the 1992 Masters Champion and captain of the 2009 President's Cup, will be working with the company’s designers to create a signature line of travel bags including golf travel covers, rolling luggage, messenger bags and backpacks.

“We’ve received some of the industry’s highest honors for creating exceptional golf travel equipment,” said Ogio’s Global VP of Golf Tom Gocke. “The one thing we still needed was that authentic icon who embodied the class, quality and personality of our gear, and we can think of no better fit than Fred Couples.”

A self-proclaimed Ogio fan, Couples has been using the company's travel bags during the 2008 PGA season. “I approached Ogio at first just to thank them for helping make my travels so smooth; when they came back with the idea of creating a signature line – and helped me see it for what it could be – I was in. I look forward to putting this gear to work all season long.”

The new signature collection for Couples will feature eight travel bags including special edition versions of the Mammoth, Monster, and Straight Jacket golf travel covers; the 9800, Terminal, and Layover rolling duffels; as well as the Epic backpack and the Street City Corp messenger bag. The company plans to begin shipping the new line in Fall 2009.

TALK IS CHEAP AND IN THIS CASE, THAT’S OK! Staying with the 2009 Presidents Cup Captain and former Masters Champion for another moment, Couples has agreed to endorse i2Telecom International, Inc. The company provides mobile applications and services. Couples will specifically represent the company's MyGlobalTalk mobile phone products and services, which it said allows users to save up to 94 percent on international phone calls.

The software download is free, unlike Couples and the service is strictly pay-as-you-go, requiring no connection fees, no contracts, no call minimums or data plans.

"I travel a lot. I've got friends and people I need to contact all over the globe, and honestly, I am not as good at staying in touch as I should be," said Couples in a company press release. "But, MyGlobalTalk is so easy to use and saves me so much, it's even got me using the phone now."

Paul Arena, Chief Executive Officer of i2Telecom International, Inc., stated, "Fred is widely respected within the professional golf community and among sports fans in general. We are confident that his association with i2Telecom will significantly broaden the awareness of MyGlobalTalk in the marketplace."

OUTSOURCING: Cleveland Golf/Srixon has formed a new advisory board whose principal role will be to offer guidance pertaining to all of the company’s brands. The company will turn to Paul Earnest- PGA Director of Golf at Four Seasons Resort and Club at Las Colinas, Scott Hamilton- Director of Golf at Cartersville C.C., Billy Harris- Director of Golf at Dallas C.C., Mike Leemhuis- National Director of the Club Managers Association of America and General Manager of Congressional C.C., Mike McGetrick- Founder of the Colorado Golf Club, Ken Morton Jr.- General Manager of the Haggin Oaks Golf Complex and President of the Association of Golf Merchandisers and Mike Small- Coach of the University of Illinois Men’s Golf Team for advice on a variety of topics.

“All of us at Cleveland Golf/Srixon are very proud to introduce our new advisory staff team members,” said Eddie Drye, Vice-President of National Sales for Cleveland Golf/Srixon. “We know that this distinguished group will play a significant role in our future success and we feel honored that they have chosen to be a part of our team.”

STOCK WATCH: Equity prices are hoping another dose of intervention will give it a much-needed shot in the arm. The news headlines were dominated last week over another rescue plan coming from Washington. On Friday, the White House said President Obama would outline steps to stem home foreclosures on Wednesday. Meanwhile, J.P. Morgan Chase & Co., Citigroup Inc. and Bank of America Corp. have committed to weeks-long moratoriums on foreclosures as the government works on a financial stability plan slated to include billions of dollars aimed at keeping people in their homes.

The House and Senate gave final congressional approval passing a $787 billion economic stimulus bill intended to jump-start a struggling economy. The stimulus plan, a mix of government spending and tax cuts, is expected to create or preserve 3.5 million jobs. Since December 2007, more than 3.6 million jobs have been lost domestically. Approximately a third of the package is devoted towards tax cuts for business and individuals, including a $400 payroll-tax holiday for workers, an expanded child tax credit and tax breaks for college expenses. New incentives are being provided for auto purchases and first-time homebuyers, among other things.

Despite the hope and promise to a better tomorrow, stock prices have been stuck in a reverse mode. The Dow Jones industrial average reverted back to its lowest close since last November, leaving it with a weekly decline of 5.2 percent. The S&P 500 and the Nasdaq followed suit posting weekly declines of 4.8 percent, and 3.6 percent respectively. Financial markets will have a shortened trading week in the US as they are closed on Monday for Presidents Day.

TRAVEL:

WHO WANTS MORE? How much golf can you play in a day? How about a full year? What if money wasn’t an obstacle to these questions? Pinehurst is challenging avid golfers for an answer - with an unprecedented grand prize to prove it.

From now through May 31, golfers from around the globe can enter the resort’s spring sweepstakes to win unlimited golf at Pinehurst for a year.   Golfers can register now at Pinehurst.com/sweepstakes, for the prize that includes unlimited golf for the winner and a friend on any of Pinehurst’s eight golf courses – including the famed No. 2, site of the 2014 U.S. Open. Valid from June 1, 2009 to May 30, 2010, the prize also includes exclusive benefits when staying at Pinehurst, visiting the spa and enjoying its many amenities.

The sweepstakes celebrates the launch of Pinehurst’s spring Unlimited Golf Package, in which golfers are automatically upgraded to unlimited golf at normal one-round-per-day rates from March 8 through May 30.  The $515 per person, per night starting rate includes unlimited greens fees (No. 2 at an additional charge), cart and practice facility usage, plus accommodations, the best breakfast in golf and a la carte dinner.  The upgrade’s best value is in eliminating hundreds of dollars in replay fees.

“We’ve had a lot of fun in creating this sweepstakes, knowing golfers would love this challenge,” said Pinehurst Executive Vice President of Golf Operations, Don Sweeting. “Golf’s the great stress reliever, the best way to connect with friends, and a mind stimulator.  Through both the new unlimited package and the prize, we want golfers to renew their love of the game.”

Full details on the grand prize, eligibility and full terms and conditions can be found on the sweepstakes page at pinehurst.com/sweepstakes. For more information or to make a reservation, visit www.pinehurst.com or call 800-487-4653.

THE INFORMATION CONTAINED IS BELIEVED TO BE RELIABLE, BUT IT IS NOT GUARANTEED. THE OPINION EXPRESSED IS THAT OF TERRY MCANDREW AND SHOULD NOT BE CONSIDERED A SOLICITATION TO BUY OR SELL SECURITIES IN ANY OF THE COMPANIES DISCUSSED WITHIN THIS NEWSLETTER. CONTENTS OF THIS NEWSLETTER MAY NOT BE REPRINTED OR REBROADCAST WITHOUT THE EXPRESSED WRITTEN CONSENT OF TMAC GOLF

 

Last Updated (Wednesday, 03 February 2010 10:20)

 

 

Web Street Golf Report

VOLUME 12, NUMBER 6

Monday, February 9, 2009

AHEAD OF THE CURVE??? Amer Sports, owner of the Wilson Golf business reported to shareholders last week its operating result for the fourth quarter and full 2008-business year. Wilson has fallen upon tough times for quite some time. It has initiated several reorganization moves over recent years, which have been chronicled in the past, to position it for the future. In 2008 its revenue base continued the trend of contraction.

Revenues in the fourth quarter came in at 12.1 million Euros, down 22% from the 2007 quarter when it reported revenues of 15.5 million. In 2008, golf revenues came in at 78.6 million Euros, down 21% from the previous year when it reported 99.4 million Euros.

The decline, according to the parent company Amer Sports, reflects mainly the decision to license the golf business in Japan and exit underperforming business areas. The Finnish company said the golf market remained competitive and retail distribution continued to consolidate and private label brands became more prevalent. Wilson, it said, gained momentum in the premium club category with a focused iron strategy.

For some perspective on Wilson’s business, it has been a steady and yet rapid decline year over year. It was back in 2002 when the golf business recorded revenues of 213.3 million Euros.

While the pain is on full display, when comparing then and now in the revenue category, Wilson Golf has already been forced to become a lean operating unit due to market forces. Given the current economic environment, it perhaps more than any other company is acutely aware of how to compete in difficult conditions. It would seem the golf industry; due to the macro economy is ripe for contraction, which in the long run could be healthy for everyone. Clearly, Wilson Golf isn’t a stranger to rejection, which is on full display with its revenue base. Nevertheless, it may well be a step ahead of its competition with respect to navigating through the challenges all are faced with in 2008. Wilson Golf’s affiliation and ownership by Amer Sports represents its biggest assets. This year more than ever, is setting up for a battle at the mid price point segments, which could also be called the “value” segment. It might be a potential advantage for Wilson since its clearly gotten use to going in and asking for the order despite a daily does of rejection.


SEEING RED: The final numbers have been tallied for the amount of golf played in the United States in 2008. At first glance, it appears better than anticipated, but as usual the devil is in the details. The coalition of Golf Datatech, the PGA of America and the National Golf Foundation published the year ended off 1.8% versus 2007. In the final month of the year, golfers were not as charitable as in 2007 as rounds played domestically were down 6.8%, according to the research. This followed a fall of 6.7% in November, which pushed the year-to-date numbers down 1.6% at the time. The point in comparing the November data to December on a year-to-date basis is first to show a trend is emerging, largely influenced by the sun belt region and secondly, it proves the bulk of the rounds played on a yearly basis are not influenced significantly at the end of the year. But in looking into specific geographies in the final two months of 2008, it begins to paint a potentially disturbing picture.

Several key locations throughout the country that are able to facilitate play in the winter months are showing a marked drop off in late 2008. These states are historically able to charge a premium due to the limited access throughout the country and the fact they are destination locations catering to winter visitors. In other words for some, not necessarily all, its a critical time of year to generate cash flow that is intended to bail out the hotter months of the summer when rates decline and local traffic are the only ones who normally support the effort.

In the Aloha state of Hawaii, rounds played in November were down 20.3% followed up in December by another 15.3%, according to the National Rounds Played research. In the Grand Canyon State of Arizona, November saw a decline of 7.7% and another 8.3% over 2007 levels in December. The Valley of the Sun, Phoenix was off 4.2% in November and 8.2% in December.

Florida reported a fall off of 6% in November, but cut that in half in December as it was only down 3%. In South Carolina play was off 17.1% in November and 8.4% in December. Inside the state, Hilton Head reported a loss of rounds in November of 7.9% and 1.9% in December. Myrtle Beach, the home of “value” (inexpensive) greens fees, reported November rounds played were down 18.1% but rebounded (relatively speaking) the following month down by only 1.2%.

The Lone Star State has often been considered a country of its own. There are those who reside in it that have been known to boast of it on occasion, while jesting not to mess with Texas. In November, Texas rounds played were up 4.3% but slumped in December falling by 13.2%. Inside these number show the Dallas/Ft. Worth area grew in November (2.3%) but gave it back and then some in December (-7.6%) Houston was up in November (10.4%) but was unable to follow through a month later, falling by 13.3% versus a year ago. San Antonio was up 8.3% in November but down 9.6% in December. On the left coast, the state of California was somewhat constant, off 4% in November and another 4.1% in December.

While a majority of the country remains closed for business, it can’t be comforting knowing the regions that are open, are reporting lower traffic patterns.


DOWNSIZING: MacGregor Golf has maintained a low profile lately even if the Great White Shark, who is known for anything but that, owns the company. The venerable equipment company has parted ways with its owner, at least in name that is. Michael Setola, President and CEO of MacGregor Golf announced The Tharanco Group has acquired the Greg Norman Collection. Setola will remain on as CEO and is a partner in the new company, Tharanco Lifestyle, LLC. Financial details of the transaction were not divulged.

"I believe the management team at GNC under Michael's leadership combined with the opportunity to build our brand with The Tharanco Group and Haresh Tharani as a partner is an unbeatable combination," said Greg Norman. "I look forward to together growing the company both domestically and internationally. I am particularly excited about future efforts to expand lifestyle sportswear opportunities beyond true golf in an effort to capture the consumer reach inherent in the Greg Norman brand."

The new agreement is effective immediately and Greg Norman Collection will continue to be managed and sold by its existing sales team.

For those who are not familiar with Tharanco Group, it boasts a portfolio of acclaimed luxury brands and private label offerings in the apparel industry. Among the brands it lists are Bill Blass, Poleci, Doo.Ri and Joseph A.

Haresh Tharani, founder, CEO and Chairman of The Tharanco Group stated, "The opportunity to partner with one of the market's iconic, globally recognized lifestyle brands and its trusted management team, is an exciting step forward for Tharanco. We look forward to bringing our worldwide operations expertise to the Greg Norman Collection and expanding the domestic and international footprint of this well-known brand."

THERE IS MORE THAN ONE WAY TO SKIN A CAT: By now everyone is acutely aware of how rugged business conditions are. For the near term it appears to be a case of more of the same. The challenges are amplified within golf due to timing. With another new season already more than a month old on most of the worldwide tours, equipment companies have a long list of new product introductions awaiting retail shelf space. However, with retailers cautious and for good reason, coupled with sixty percent of the country’s golf outlets still closed for business, it’s unknown what will happen when the selling season is in full bloom. Suffice is to say, the economy is the top story in 2009 but inventory management is equally as important, even if it doesn’t get nearly the same notoriety as the bigger picture. Record sell in to the trade by any business, which has been littered throughout press releases in 2008 even when rounds played were flat and the bottom fell out of the fourth quarter’s retail environment, isn’t going to be doing anyone any favors. More than likely an all out supply side attack to bolster revenue numbers in an unprecedented domestic economy is only going to lead to an eventual clean up exercise to purge excess inventory. Sell through is the key to survival.

One company is employing a polar opposite approach to flooding the market with new product. Bridgestone Golf has introduced its first ever limited edition set of irons. The company’s J36 Cavity Back series has undergone a makeover, utilizing a proprietary black finish to give the irons a unique new look. “The J36 Black irons have created some incredible buzz on Tour and on the internet message boards,” said Danny Le, Golf Club Marketing, Bridgestone Golf, Inc. “The sleek black appearance, is one every iron collector will want to have, but we’re only making 500 worldwide.” Le said the irons are on allocation for Bridgestone Golf’s sales reps and placement isn’t going to be an issue at all. “It’s a limited run and retailers have expressed to us their appreciation,” Le shared with Web Street. “The reaction has been phenomenal. Its also refreshed the line this year.”

The company has been adamant that it won’t change its mind and extend beyond the 500 sets despite the warm reception it’s received from retail partners. While the amount of revenues the J36 Black irons will generate are limited, it will prompt for a quick turn over and in this new economy, that can’t be a bad thing.

The J36 Black Cavity Backs (4-PW) will feature a suggested retail price of $1000, and will only be available through custom order beginning March 2009.

DRIVERS WANTED: Callaway Golf has added the FT-9 and Big Bertha Diablo Driver to complement the FT-iQ model, which it introduced late last year. The next generation in Fusion Technology, Callaway said, maximizes performance with results unachievable in a single-material driver design. The OptiFit Weighting System provides draw and neutral CG positions, according to the company. It promises complete inertial design for optimization in Moment of Inertia, Center of Gravity (CG), CG bias, face design, loft and lie to enhance overall performance. The FT-9 is I-MIX compatible for recreational players who are interested in having the ability to change shafts on the fly.  It is available for a retail of $399.

The Big Bertha Diablo Driver has a four piece formed construction, Callaway said. Employing Fusion-like methods to an all-titanium driver have allowed its engineers to achieve optimal CG locations and higher MOI properties, Callaway stated. The new Big Bertha Diablo Driver features a Hyperbolic Face cup, as found in the Hyper X model that was introduced last year. Callaway says the design enhances ball speeds across the face. The Diablo will retail at the $299 price point.

Jeff Colton, Sr. VP, Research and Development, Callaway Golf remarked, “Our ‘Complete Inertial Design’ principle factors all design variables together to produce the most balanced, highest-performing drivers possible. Performance flaws in ball speed, trajectory, sound and aesthetics are often the result of chasing any one-design variable at the expense of another.  Instead, we optimize every one of our designs to create balanced performance for golfers of all skill levels.”

Fans of Big Bertha can also look for Diablo Fairway Woods in 2009, which incorporate Edge Technology that moves weight where else but to the “edge” of the club, providing high MOI for stability.  Callaway has designed unique draw and neutral head shapes to provide players with options to improve shot-shaping control.  Variable Face Thickness Technology, a mainstay in Callaway designs throughout the years, promises to increase face efficiency for solid shots hit across the entire face. Phil Mickelson, a Callaway Golf Staff Professional stated,  “For 15 years I’ve been searching for a fairway wood that I just loved and this Big Bertha Diablo is it.  It’s the best I’ve ever hit because it’s easy to get up in the air and flies perfectly.” The fairway woods have a retail price (steel/graphite) of  $179/$199 respectively.

Big Bertha Diablo also has a hybrid offering to tempt golfers. The latest from Callaway features a Dual Runner Sole, which the company said provides superior turf interaction from all types of conditions by reducing the surface area that comes into contact with the ground. It boasts a low and deep CG position to promote a potential dynamic ball flight from fairway, rough or tee.  Callaway’s proprietary S2H2 Technology is incorporated in the design, which it said, moves weight from the hosel and repositions it to more advantageous areas of the club head. Dr. Alan Hocknell, VP of Innovation and Advanced Design, Callaway Golf said,  “The Dual Runner Sole promotes solid contact in a variety of turf conditions and lowers the leading edge to make the sweet spot more accessible.”

The Big Bertha Diablo Hybrids will have a retail price (steel/graphite) of $139/$159 respectively.

GOTTA BE THE SHOES: Phil Mickelson was hoping a change in drivers might spur his game to greater heights. Lefty was as much at a loss for answers to his performance at the FBR Open, where he came up short in a playoff in 2008 to J.B. Holmes. “ I don't really have a great answer for that.  I was surprised as everyone, because I felt heading in, I was starting to play some good golf,” Mickelson said after his early exit. “ I was very surprised, because I felt very good heading into the tournament.”

He’s hoping an equipment change that has been in the works for a while will be part of the remedy to the slow start. “The driver that I've spent the offseason working with is legal this week,” he said. “ I had been practicing this off-season with this FT-9 and it got approved (by the USGA) yesterday (Feb 2). I'll be able to put that back in play. I shorten up my backswing and accelerate through more, I had to have a little bit faster closure rate and so forth, and this new FT9 addresses this.  My misses are better with this club than they ever have been so I'm excited about my driving for the year.”

At the FBR, Mickelson only found eight fairways out of a possible 28, in regulation over his two rounds. The Arizona State alumni said he used a Callaway FT-5, which he used last year, in Scottsdale while waiting on the FT-9. “And I hit it hard but I was missing it to the right with some draws, and on those fairways, it was all bounded into unplayable lies,” he added. In his opening round at the Buick Invitational, Mickelson with his FT-9 immediately found the fairway 50% of the time (7) nearly matching his output in the previous week.

SIDENOTE: Its worth noting that TaylorMade’s R9 has already found the winner’s circle with Pat Perez at the Hope, while Mickelson and Callaway were awaiting a green light for his FT-9 to be allowed in tournament play.

FANCY FOOT WORK: In these difficult times, staying on light your toes is a benefit to the ever changing, dynamic market conditions. Efficiency is a critical element towards success and unlike other trends it never seems to go out of fashion. Nike Golf is borrowing on these two themes with the introduction of its lightest performance golf shoe to date. The Nike Air Zoom Vapor weighs just 13.8 oz (which pertains to a Men’s size 9.0).

To successfully achieve the combination of lightweight and performance in a golf shoe, Nike Golf said it drafted off of the technical expertise of its parent company, Nike Inc.’s footwear heritage.  In 1972, track coach and Nike co-founder Bill Bowerman created the Moon Shoe as the world’s lightest performance running shoe.  In 1998, Nike Soccer introduced the Mercurial Vapor Soccer boot; a lightweight shoe designed to provide not only stability and traction, but also increased speed through lower weight.

Inspired by the Mercurial Vapor Soccer boot, Nike Golf’s Air Zoom Vapor is made with a one-piece micro fiber upper that is lightweight, strong, waterproof and breathable. This high-performance upper is coupled with a full-length chassis that together is said to provide the ultimate in stability and comfort.  The high-end synthetic upper material is more durable than leather, more form fitting to the foot and will not stretch over time, Nike Golf promised.

The Air Zoom Vapor also features Nike’s Power Platform Ultra, which provides the ultimate in weight transfer and balance control, the company said. To make the shoe more lightweight, the middle section of the sole is taken out for added comfort without jeopardizing stability.

The Air Zoom Vapor is available at retail with a MSRP of $176. It is also available in a women’s version in Black/Watermelon-White; Light Taupe/Birch-White; Purple Slate/Blue Ice-White color schemes.

According to Nike, Stephen Ames, Stewart Cink, David Duval, Lucas Glover, Carl Pettersson and Bo Van Pelt debuted the product at the FBR Open. Suzann Pettersen has trusted the shoes since the end of the 2008 season, the company said and will continue to wear them in 2009.

IS THE ROSE OFF THE BLOOM? Perhaps nowhere is it more apparent that golf company’s basic strategy is to offer as much new product as possible (it seems) in order to stimulate revenue opportunities. Now this isn’t specifically directed towards Cleveland Golf/Srixon, (after all they are not alone in this strategy) however the following example underscores the point. The women’s market for golf equipment is considered both to be an important one but in some circles it’s argued to be an after thought compared to the men’s side of the ledger. However, in 2009 Cleveland Golf/Srixon doesn’t want anyone in the X chromosome feeling left out as it has put together a wide offering of products. Designed specifically for women, the new Bloom line includes a HiBORE Bloom driver, fairway woods, hybrids, irons, as well as a Bloom Niblick, CG14 wedge and VP 509 putter

According to the company, each club in the Bloom line features a lightweight and high MOI design that improves distance and forgiveness. The new line also marks the first time that Cleveland Golf has ever introduced a complete line of matching clubs, bags, accessories and apparel made by Cleveland Classics.

The new Bloom VP (Visual Performance) 509 putters, Cleveland/Srixon said, has new and improved visual alignment warning aid. Dual Axis Alignment technology in the product allows golfers to determine when their hands move out of position and to detect when their eyes are not directly over the ball. By addressing these two issues, The Bloom VP 509 putter promises to increase impact consistency while improving distance control for a truer roll on the greens.

The Cleveland Golf Bloom line will begin shipping to retailers on February 15, 2009.

Here is a listing of the BLOOM Minimum Advertised Pricing:

HiBORE BLOOM DRIVER - $299.99

HiBORE BLOOM FAIRWAY - $179.99

HiBORE BLOOM HYBRID - $149.99

HIBORE BLOOM IRONS - $599.99 (Set of 7)

BLOOM NIBLICK - $109.99

BLOOM CG14 Wedge - $109.99

BLOOM VP 509 Putter - $129.99

BLOOM SET - $999.99

IT’S GOING TO BE A CLASSIC, REALLY! Cleveland Golf/Srixon is getting into the apparel business. The company introduced at the 2009 PGA Merchandise Show in Orlando, FL, last week, a sportswear collection, which is intended to take golfers from the golf course to the clubhouse. Why not, misery loves company. According to the company’s press material, the roots of the game inspired this strategy/directive and it combines traditional looks with modern-day elegance.

The Cleveland Classics “Prospect” shirt features a performance fabric that, “feels up to 4° Celsius (7° Fahrenheit) cooler than traditional fabrics by incorporating nano-elements, micro-channel yarn, and three-dimensional construction.”

“Our goal in creating the Cleveland Classics collection was to deliver a product line that is timeless, memorable, and embodies the spirit of ageless design,” stated Claudia Schwarz, Vice President of Apparel Development and Design for Cleveland Golf/Srixon. “So, if you are looking for golf apparel synonymous with modern-day elegance, Cleveland Classics is your brand.”

Greg Hopkins, President/CEO of ClevelandGolf/Srixon added, “We feel this is the ideal time for us to launch a new apparel line. We feel golfers, today more than ever, are looking for great quality at a value price, which is what we’ve been doing with our hard goods for years.”

HOPING TO BE HOT: Mizuno has added several new offering to its metal wood business. The new MX-700 family features a driver, fairway woods, and hybrids. The MX-700 possesses a "Hot Metal" Ti-9 titanium face, plasma welded to a 6-4 titanium body, Mizuno said. It remains to be seen whether this version of titanium possesses anything that hasn’t already been found by other companies. The plasma-welding component is typically used to save on some weight to be redeployed within the body of the club head. However, this isn’t the first driver to incorporate this technique in the market. Mizuno said its MX-700 has a low and deep center of gravity, due to a geometrically driven head shape that translates to low spin and a high, penetrating ball flight.

"The Ti-9 'Hot Metal' face in the MX-700 is the first of its kind, and is designed to enhance initial ball velocity from every spot on the club face." said Dick Lyons, VP and General Manager, Mizuno USA Golf in a press release. "This breakthrough face technology combined with an optimized launch angle, spin rate, COR area, and Moment of Inertia make the MX-700 the longest and most forgiving driver you're going to find." The MX-700 is equipped with a suggested retail price of $360.

Matching fairway woods carrying the 700 series name are also new for 2009. "We've noticed that our tour players in particular have been asking for 'hotter' performance from their fairway woods recently. The requests for hot faces used to be confined to driver, but these guys are trying to squeeze out every possible yard,” said David Llewellyn, Golf Club R&D Manager, Mizuno USA. "With smaller headed designs like fairways and hybrids, it isn't easy to get that 'hot feel' - the smaller face area is more rigid. But by using the new ES230 steel used in the MX-700s we've done everything we can from a material perspective. The 700's feel extremely lively at impact and I think amateurs are going to love this advancement just as much as the pros."

Suggested Retail Price is $240 for the MX-700 fairway woods.

Rounding out the MX-700 family is a hybrid model. "'Hot Metal' Technology is truly a breakthrough in face technology because it can be utilized into the design of not only drivers, but fairway woods and hybrids as well." said Lyons. "The use of high tech ES230 steel as the face material in the MX-700 hybrid increases the COR, or trampoline effect across the entire face, making it feel like the ball explodes off the face with each and every swing."

The Suggested Retail Price is $200 for the MX-700 Hybrids, Mizuno said. The MX-700 series will be available in stores by mid-February, 2009.

WHAT YOU SEE IS WHAT YOU GET ... NOT ALWAYS! In partnership with BNL Eurolens, a member of the Essilor Group, Sundog Eyewear has created the Sundog Mela-Lens utilizing state-of-the-art Melanin Lens Technology, according to the company, to provide golfers the ultimate in eyewear: protection and Genuine Performance. “The Mela-Lens is one of the most important advancements in Sundoglens technology in many years,” said John Whitney, Sundog Eyewear Director of Product Development. “The breakthrough Mela-Lens filters out higher energy visible light [HEVL or ‘blue light’] and ultra violet light giving golfers outstanding veiled glare reduction without polarization, and improved contrast and sharpened definition without color shift.”

“Mela” is short for Melanin, a naturally produced pigment that acts as a sunscreen protecting the skin from ultraviolet light, the company said. The exclusive Sundog Mela-Lens are infused with a synthetic melanin that absorbs light seamlessly over a broad spectral range providing 98 per cent blue light filtration and 100 per cent UVA/B protection,

By filtering instead of blocking blue light, Melanin Lens Technology does not affect color perception and actually improves visual acuity. Because the Mela-Lens actually absorbs more ultraviolet light than blue light, and blue light more than green light, contrast is improved, sharpening perception of depth and details.

Many people have been described as experiencing an immediate ‘soothing’ difference, while the true benefit of the Mela-Lens Technology is the filtering of the invisible HEVL light which results in reduced fatigue and ultimately better performance.

The new Mela-Lens are available in Sundog Eyewear Zone, Links, and Bomb models for 2009. The MSRP for Zone and Bomb (Links not yet available in the US) is $66. To see (pun intended) more visit www.sundogeyewear.com

STOCK WATCH: It may be a new year, marked with a new administration in Washington that promised changes. But in the early going of 2009 it’s been more of the same that plagued 2008. In January, U.S. payrolls fell by 598,000, the most since 1974. It pushed the unemployment rate to 7.6%, the highest since September 1992. Adding insult to injury, another 66,000 of job losses were added to revised figures for December and November, bringing the tally since the recession officially began in late 2007 to 3.6 million.

For all of 2008, the economy lost a net total of 2.9 million jobs, according to the revised figures. That marked the biggest annual loss on record and was worse than the 2.6 million initially estimated last month. While these numbers are sobering, they are nothing compared to what is coming out of the far east.

Financial markets and investors are also keeping a wary eye on China and other developing countries for signs of how far the global recession has spread. Chinese factories were expected to continue to pump up oil demand, but experts are no longer banking on this to happen. Recent reports from the Chinese government say 20 million people have been thrown out of work, and experts now believe that the country's once exploding economy has stalled.

So the old adage applies, if wasn’t for bad news there wouldn’t be any news at all! And on that cheery note, believe it or not, equity prices broke a dry spell. For the week, the Dow industrials gained 3.5%, snapping a four-week losing spell. The S&P 500 was up 5.2% on the week, and the Nasdaq jumped 7.8%. Meanwhile, crude oil was down 3.6% for the week, its second consecutive week of lower prices. So what gives?

Wall Street looked past the employment numbers at the end of the week in anticipation of another stimulus/bail out plan that is in the works by the Obama administration. Its hoped that another rescue plan, once approved by the Senate will be the remedy the American economy is in desperate need of to turn the corner and rebound from its recession. Treasury Secretary Timothy Geithner is scheduled to give speech midday Monday on the bailout overhaul.

TRAVEL:

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THE INFORMATION CONTAINED IS BELIEVED TO BE RELIABLE, BUT IT IS NOT GUARANTEED. THE OPINION EXPRESSED IS THAT OF TERRY MCANDREW AND SHOULD NOT BE CONSIDERED A SOLICITATION TO BUY OR SELL SECURITIES IN ANY OF THE COMPANIES DISCUSSED WITHIN THIS NEWSLETTER. CONTENTS OF THIS NEWSLETTER MAY NOT BE REPRINTED OR REBROADCAST WITHOUT THE EXPRESSED WRITTEN CONSENT OF TMAC GOLF

 

Last Updated (Wednesday, 03 February 2010 10:23)

 

 

Web Street Golf Report

VOLUME 12, NUMBER 5

Monday, February 2, 2009

 

KEEPING IT REAL: Business conditions in golf went south in the late stages of 2008 thanks to the 21st century bogeyman: The economy. It left a mark in the fourth quarter and on the entire year for several companies’ operating results proving no business large or small is completely insulated to the ways of the world.

The Acushnet Company (Titleist, Cobra and FootJoy), owned by Fortune Brands (FO: NYSE), has represented the best in class within the equipment category for many years based on revenues and bottom line results that its consistently generated on an annual basis. The company through the first nine months of 2008 reported flat sales over 2007, while its operating income was trailing the previous year by nearly 17%. The fourth quarter proved to be the most challenging, to date, for it.

Craig Omtvedt, Senior Vice President and Chief Financial Officer explained. “Fourth quarter Golf revenues were $212 million, that is 13% below the year-ago quarter when sales increased 13%,” he began. “Adverse foreign exchange (rates) reduced reported quarterly sales by 4%. Additionally, the golf market became increasingly challenging in the quarter as consumers pulled back on bigger-ticket purchases and retailers reduced inventories. On the upside, sales in the quarter benefited from strong sell in for the new Titleist 909 series drivers, fairways, and hybrids, as well as continued growth in international markets,” Omtvedt said. “Operating Income (OI) was down $12 million (coming in with a loss of $18.3 million) from last year’s loss of $6 million. In addition to the fact that in the golf industry's seasonally smallest quarter we normally run a loss, (but) results were impacted by adverse operating leverage and lower volume,” he explained.

The CFO presented the operating results on a full year basis in order to provide further context on the year that was. “Our Golf sales came in at $1.37 billion. That is off 3% from our industry record results a year ago when sales were up 7%,” he began. “Lower sales in the US were partly offset by double-digit growth in constant currency in Japan, Korea, China, and Southeast Asia. Full year golf ball sales were modestly lower against the high single-digit gain a year ago, in part due to companies reducing custom golf ball orders and industry-wide inventory reductions,” he said. The company, despite the macro economic picture looming overhead in 2009, could see some lift in this category as it has new versions of the Pro V1 family of golf balls ready to enter the market soon.

“On the club front,” Omtvedt continued, “sales increased as strong double-digit growth for Titleist more than offset lower sales for Cobra, which faced a challenging comparison to 2007, when Cobra sales grew at a double-digit rate. Titleist drove significant share gains in irons with the successful introduction in 2008 of the new AP1 and AP2 irons. We are also very pleased with the buzz in the marketplace for the new Titleist 909 metals introduced in the fourth quarter. Sales of golf shoes, gloves and accessories were relatively flat. Even so, FootJoy strengthened its position as the number one shoe in golf with market share gains in the US.’

Shifting to the bottom line, the CFO said, “At the operating income line, (OI) before charges in golf was $125 million, and that is lower than last year by 25%. The variance between sales and operating income was largely attributable to brand investment, both here in the US and internationally and to adverse operating leverage.”

Bruce Carbonari, Chairman and CEO of Fortune Brands added, “Our golf business delivered its second best sales year on record, benefiting from new-product development and double-digit growth in Asian markets. Brand investment, higher commodities costs and lower volumes impacted full-year golf operating income. While golf results in the seasonally smallest fourth quarter reflected soft industry demand and adverse operating leverage, we benefited from strong sell-in for new advanced-technology Titleist golf clubs.”

Looking out at 2009, Carbonari was candid about his assessment of what remains in front of the brands he is responsible for. “In the most difficult and uncertain economy in decades, we’re planning for the global economy to get worse before it gets better, and we expect the challenges of 2008 to continue throughout 2009,” the CEO said. “While we can’t control the health of our markets or headwinds such as adverse foreign exchange, we can control how we compete,” he continued. “In the Golf business, we remain focused on two key initiatives important to extending our leadership, product innovation and international growth. These internal growth initiatives are particularly important, given the golf industry’s challenges,” he explained. “While participation in golf was relatively stable in 2008, with rounds of play lower by less than 2%, we are seeing consumers pull back on planned discretionary spend from products such as new clubs and new golf shoes, as well as reductions in destination travel and spending on corporate custom golf balls.

“In this environment, we have continued to invest in new product technologies to sustain our market share positions and stimulate demand. Our investments in promising international growth opportunities are continuing to pay off. In 2008, we continued to grow at a double-digit rate in key Asian markets led by Korea, Japan, and China. Sales for our golf brands outside the US reached 42% of our total golf sales in 2008, an all-time high in our golf business. As in other businesses, we are also working hard to contain costs in golf to enhance our competitive position. That includes an ongoing initiative to right size employment levels,” Carbonari said.

Chief Financial Officer, Omtvedt, added, “Over the course of the coming year in golf, we'll benefit from the strength of our brands and from next-generation new products. Even so, the soft consumer environment in the US and Europe, particularly for discretionary purchases of golf clubs, an anticipated Foreign Exchange hit of approximately $25 million, as well as negative operating leverage will more than offset expected growth in key international markets for our golf business.”

THEN AND NOW: The moment in time has arrived yet again, that represents a cross roads of sorts. The conversation is temporarily centered on the year that was. But it quickly transitions to the year that is in progress and what it might or could be. Part of the clues is supposed to be in the trailing results. However, the world is a much different place for many consumers and businesses already in 2009. While 2008 fades in the rearview mirror, clearly the focal point for all centers on visibility for what lays ahead?

Callaway Golf (ELY: NYSE) reported its fourth quarter and year-end numbers for the 2008 campaign. What appeared to be promising, as the year began, underscored with record sell in to retail accounts domestically and internationally has quickly changed course due to the economy as well as foreign exchange rates.

Net sales last year were $1.117 billion, which generated a net income of $66.2 million for Big Bertha. Drilling down a little into the product categories show Callaway’s metal woods business in 2008 was down 12% or $37.6 million coming in at $268.3 million. In the fourth quarter, despite a difficult business climate, metal wood sales were only off 3% ($31.3 million versus $32.3 million in 2007).

Callaway’s irons business was down a $1 million over 2007, despite registering an increase of 5% ($48.3 million vs. $45.8 million in ’07) in the fourth quarter of the year. Putter sales were lower by $7 million or 7% on the year. The drop off came in the final quarter, where sales were down $7.7 million or 37% compared to the same period in 2007. Golf balls were a pleasant surprise, up $10 million in 2008 or 5%. In the fourth quarter, Callaway’s ball sales were up 11% coming in at $42 million compared to $37.7 million in ’07. But the area where the company has delivered the highest growth in revenues is its Accessories business. The category was up 15% or $28.6 million over 2007, despite a soft fourth quarter where sales were down 3% or $1.2 million.

The net, net was a drop in revenues of $7.4 million or 1% of Callaway’s top line sales in 2008 versus 2007. However, there were some extenuating circumstances that played a small role in the final numbers. “The new products (X-22 irons and FT-iQ driver) that we shipped (in the fourth quarter) were right around $40 million,” stated Brad Holiday, Callaway’s CFO on the company’s conference call to Wall Street. “That compares, I believe, with last year's $10 million to $15 million, and I think the year before was more in that $33 million range.”

Transitioning to the matter of today and tomorrow, George Fellows, President and CEO said, "Looking forward, we expect more challenges as a result of continued unfavorable global economic conditions. In addition, given the recent overall strengthening of the US dollar, we anticipate that foreign currency exchange rates will have a significant adverse impact upon the translation of our international results in 2009 and therefore on our consolidated results. Because it is too difficult to predict what consumer spending or foreign currency rates will be in this environment, we are not providing specific financial guidance for 2009 at this time.”

Fellows and company said the current environment continues to provide mixed results that make it difficult to process to any concrete conclusions in the near term. “Everybody is cautious and correctly so, because everybody is facing the same uncertainties,” said Fellows. “The major players in our business are pretty solid. It always is going to depend on how the market breaks. The reason it's very puzzling is, if we were to be getting only negative stories in, I'd feel somewhat differently, but depending on the day, you get some very interesting stories. That's why we're reluctant to give any very specific guidance at this point, because it's just too fluid a situation. There is a good chance. I mean, I've seen a lot of economic reports that fundamentally say there's an expectation of some mild recovery in the second half of this year. We're just kind of holding our judgment until we see some real action and that will probably be in the April, May timeframe. The only important thing as far as any of us are concerned is what the consumer does when they finally come out of their houses and we don't know the answer to that at this point.”


WILL THERE BE MORE TO COME?? Ginn Sports Entertainment, LLC and Ginn Development Company, LLC have decided it’s no longer in the golf business. The Ginn companies have withdrawn their sponsorship of the Ginn Championship at Hammock Beach, the Ginn Open at Reunion. The Ginn sur Mer Classic at the Conservatory will not be hosting or producing any of these professional golf tournaments (including 2009 tournaments), it said, and will no longer be sponsoring professional golfers.

Ginn Development Company is in the real estate resort and community development business - a sector of the economy that has suffered significantly during the credit and real estate meltdown.

Recently, the real estate sales and marketing operations for Ginn communities were terminated due to the loss of revenue in these businesses.  The revenue that was generated from these operations, according to Ginn, had been used to fund the professional golf tournaments and sponsorships, including paying for the prize money and television coverage for these events.

“We have worked diligently with many others for several months to find solutions to our predicament with respect to these professional golf tournaments,” said Robert Gidel, president and CEO of Ginn Development Company said in a prepared statement. “We did the best we could, but the economy got the best of us with respect to the tournaments.”

Last August, Ginn Sports Entertainment announced that the Ginn Tribute would not take place in 2009 and 2010. “While our association with professional golf has been brief, it has certainly been a highlight for our owners, members, guests and employees,” said Gidel.  “We are grateful to all our employees, members and volunteers, and to the professional organizations and charities that we have worked with that have made this experience a memorable one.” Its believed Ginn still had three years remaining on its title sponsorship contract with the Champions Tour.

The news wasn’t received very well at the PGA Tour headquarters. It wasted little time responding to the news as it sued Ginn Development on Friday, citing breach of contract after the resort company dropped sponsorship of the Champions Tour Ginn Championship.

"We regret having to take this legal action, but feel we have no other recourse than to try to recover what had been guaranteed to our members through existing agreements with Ginn Companies," PGA Tour spokesman Ty Votaw said in a statement. "We also had no forewarning that Ginn was planning to cancel the 2009 Ginn Championship at Hammock Dunes, and only learned of the decision when the company issued a release late Wednesday. In fact, we had been in discussions with them on possible modifications to the agreement. Until this issue is resolved through the legal process, it would be inappropriate to comment further at this time."

It remains to be seen what the Tour can accomplish by suing Ginn. In the world of public relations, it sends a loud message to the current portfolio of sponsors the Tour intends to defend its contractual obligations regardless of the circumstances. It also sends the same message to those who it may be courting in the future, if they are indeed paying attention or come across it in their due diligence. Whether the Tour can recoup any lost dollars by employing the legal system to intervene, no one will likely ever know outside the ropes. It now turns into the standard line of no one commenting on pending litigation. Its safe to surmise that Ginn has bigger issues on its plate, while the Tour would be well advised to revisit its existing sponsorship “partners” for a timely conversation on the topic. However, when it’s all said and done, unforeseen circumstances clearly trumped the “value” of the deal. Time will tell if any other company falls into this category. To put it nicely, when legal departments enter into any relationship in a professional manner, its rare those acquaintances are strengthened over time...

THE HAVE AND THE HAVE NOTS: News surfaced last week during earnings season on Wall Street just how difficult the economy is making it for many in corporate America and beyond for that matter. It extends to the rank and file that helps to execute on a daily basis for these very same businesses. Last week alone saw announcements from several high profile companies representing the backbone of corporate America in some way shape or form, of more than 70,000 layoffs in sectors from trucks to technology. But it would seem not everyone is feeling the pinch.

Callaway Golf (ELY: NYSE) reported on its 8-K filing with the Securities and Exchange Commission that its board of directors has approved a bonus payout for the company’s senior management. While the amount wasn’t 100% of the targets previously established by the compensation committee, it was nonetheless a healthy return.

A limited payout to the Executive Officers under the 2008 annual incentive plan was approved with several factors taken under advisement in justifying the decision, according to the filing. It appears the factor that weighed the greatest was management’s ability to deliver, “ record sales and earnings in the first half of 2008.”

The incentive payout for 2008 was based as a percentage of base salary, which was 34% for George Fellows, Chairman and CEO and 18.7% for each of the other members of the Executive Officers. In dollar terms, the compensation payout was $311,231 for Fellows; $102,850 for Steve McCracken (Chief Administrator Officer, Sr. Exec. VP and Sec.); $93,500 for Brad Holiday (Sr. EVP and CFO); $71,096 for Thomas Yang (Sr. VP of International); and $66,421 for David Laverty (Sr. VP of Operations).

Staying on the theme of compensation for a moment, the board of directors at Callaway Golf approved the recommendation of its Compensation Committee with respect to the 2009 long-term incentive program for the Company's Executive Officers. It pertains to the same individuals listed above who received partial, but nevertheless, bonuses for 2008. The Committee approved a targeted long-term incentive grant value for each of the Executive Officers as follows: $3.2 million for George Fellows and $350,000 for each of the other Executive Officers. For each Executive Officer, 2/3 of the grant value will be allocated to stock options and 1/3 will be allocated to restricted stock units. Perhaps what’s even most interesting isn’t necessarily the dollar levels but rather the exercise price method that was granted for these stock options, which will play a role in determining the eventual total payout of this plan back to each recipient.

According to the Company’s 8-K filing with the Securities and Exchange Commission, the awards were granted effective on the second trading day following the issuance of the Company's actual earnings release announcing final 2008 results. It begs the question whether management’s was swayed in any way with respect to presenting its opinion to Wall Street analysts regarding its outlook.

In his opening statement to the investment community, Callaway Golf’s CEO, George Fellows stated last week, “The macroeconomic turmoil being faced on a global basis remains relatively unabated. Clearly, we've not seen the bottom as yet and we'll continue to face headwinds into 2009 as we have in the last quarter of 2008.” Appropriate comments given the current plight of the world. However, looking back in time and frankly not that long ago (October 30, 2008) Fellows’ opinion on the economy and a bottom has changed. “I think the election is having a fairly pronounced effect on some consumer confidence which I really believe very strongly will change or begin to change on November 5. I’m increasingly of the opinion that when the benefit of trash talking the economy and everything else that’s going on that currently exists on the part of all political parties, goes by the boards i.e., when the election is over, I think that the tenor of the social discourse is going to begin to improve and I think that will begin to have some effect on later in the year purchases and holiday. I believe that we may very well be bouncing along the bottom a bit now and when the election is over, I think we will begin perhaps a slow, but nevertheless, recovery period.”

At the time Fellows was selling to the street his company’s prospects for the fourth quarter along with hitting sales and earnings targets for 2008. Now, it can be argued these remarks are being taken out of context and with the liberty of hindsight being employed. Fair enough and I will accept the fall out that may or may not deliver. But what isn’t factored in with respect to these comments is that in 2008, prior to the first quarter operating results being released (January 31, 2008), Callaway’s Compensation Committee had already adopted on January 14, 2008, the 2008 Senior Management Incentive Program. On January 16, 2008, Callaway Golf Company announced estimated net sales for the year ended December 31, 2007 to increase approximately by 10% to a record $1.125 billion with corresponding earnings per diluted share of $0.79 to $0.81. The stock options under the 2007 Incentive Program were established with an exercise price of $14.92. The difference this year is in the sequence of events. Management spoke prior to the exercise price being established by market forces versus in the prior year it was already determined ahead of its conference call to Wall Street. Analysts have been known to be influenced by the opinion of a company’s management (in any industry for that matter) and this is where it gets interesting. Callaway shares closed last Thursday at $7.85, which coincides with the second trading day following the issuance of the Company's actual earnings release announcing final 2008 results. Again, recall that the Company’s CEO had a marked change of opinion with respect to the economy which represents the strongest challenge any business is currently faced with this year. At the very least, Callaway management was put in a difficult if not a no win situation given the fact its stock option price hadn’t yet been established. How much of a relationship, if at all, its words had on the fundamental movement of its stock price is difficult to determine. The overall market swings, influenced by the macro economy, are also to be considered in the equation.

The 2009 exercise price for stock options represents a 47% haircut from the price established in 2008, despite partial bonuses being awarded for a job well done to senior management. As a footnote on the cash bonuses generated for the 2008 performance, the Compensation Committee agreed to pay 68% of the established targets, which is well within its rights to do so. Time will tell whether the exercise price under the 2009 Incentive Program is a good or bad trade... No word yet what the management team must achieve in 2009 in order to qualify for some or the entire bonus program.

THE WAIT IS OVER: New product introductions have been a tried and true method for all golf companies to stimulate demand and in turn revenue opportunities. Clearly, 2009 will be no different on a worldwide basis. But given the economic challenges that exist, simply introducing something new doesn’t guarantee the desired results will be delivered. However, there is one specific set of circumstances that stands above the others that favor the odds of a return on investment. “Generating over 40% of all on course golf ball revenues for 94 consecutive months, ProV1 represents the single greatest golf ball business opportunity,” said George Sine, Vice President Golf Ball Marketing and Strategic Planning, Acushnet Company Worldwide. “It has been the best selling and top golf ball model both in the on and off course channels. For 2009 we have changed nearly every component of it, not to make it new, but to make it better.”

Longer with better performance attributes and more durable are some of the ways Titleist said it has improved its next generation of its popular ProV1 golf balls. “By reformulating and increasing the size of the core, we have increased ball speed, making the New Pro V1 even longer than its predecessor,” said Bill Morgan, Senior Vice President, Golf Ball Research and Development, Acushnet Company. “In addition, a new high performance Urethane Elastomer cover formulation improves cover durability.  The new cover, new core, and redesigned thinner Ionomeric casing layer, improve Pro V1’s legendary Drop-and-Stop scoring performance.”

Since bursting into the golf industry in the fall of 2000 and immediately becoming the benchmark for its competitors to aspire to, Titleist said it has raised the bar in quality and performance of its three-piece multi-layer 2009 Pro V1. “Pro V1 loyalists, and golfers ranging from the world's most accomplished players to those aspiring to optimize their games, will experience longer distance with improved scoring performance on Pro V1, as well as longer distance on New Pro V1x, with the added benefit of more durable covers on both models,” said Sine. “At the onset of the New Pro V1 and Pro V1x development process, we engaged in comprehensive research with Tour Played golf ball consumers toward determining which attributes were most important and beneficial to their games. Our findings were extensive and the resulting improvements address the expectations cited by the target audience as being vital toward optimization of their game and important to their golf ball selection.’’

Titleist said it has improved the performance characteristics of the 2009 ProV1x model in part with a new speed enhancing Ionomeric casing layer, which the company said controls driver spin for longer distance. A soft center, high-energy 1.550’’ dual core found inside the 2009 ProV1x delivers low spin and increased velocity, Titleist said. “The New 2009 Pro V1x is the ultimate performance companion to the New Pro V1,” said Morgan. “A four-piece, dual core design featuring a redesigned Ionomeric casing layer, controls the spin rate on full iron shots into and around the green, in addition to providing increased distance off the driver.” Sine added, “We have advanced Pro V1 and Pro V1x with the goal of not merely meeting, but exceeding golfers’ expectations.  Professionals and amateurs alike have accompanied us every step along the way by providing insight, feedback and validation that has resulted in our best effort to make every shot count for Pro V1 loyalists and current players of Tour Played products seeking to advance their games.”

The New Titleist Pro V1 and Pro V1x golf balls begin shipping to golf shops in mid-February, with a suggested retail price of $58 per dozen (MAP: $45.99).

Prior to the commercial introduction by Titleist, the new New Pro V1 and New Pro V1x golf balls have been available to members of the PGA Tour in advance of the 2009 playing season. Pat Perez captured the first PGA Tour win for the 2009 Pro V1x golf ball at the Bob Hope Classic. Titleist provided testimonials from some of its Tour staff regarding the product.

“I put the New 2009 Pro V1 in play straight away.  I was really excited about this ball coming out when we were testing it last fall.  I showed up here this week (Mercedes-Benz Championship) with a few dozen in the locker and it feels great.  I just really like the feel I get off it, especially around the greens.  I can even feel it with the longer clubs and the driver.  It just feels more workable.  I certainly like that aspect of the ball.”

- Adam Scott, who finished tied for 2nd at Sony Open in Hawaii.

“I am really happy with the New 2009 Pro V1.  It was an easy change for me.   This has a little more spin and I have gained more control from tee-to-green.”

- Camilo Villegas

“I notice a much stronger ball flight with the New 2009 Pro V1 than the previous model.  It has some 'pop' to it off the driver and has good flight with the irons.  I was looking for more spin with my wedges and this ball gives me that.  I also notice improved durability.  There has been a few times with this new ball I thought I might have sheared it and it still looked like new.  It's better.  I put it into play the first chance I got.” - Troy Matteson 

“The first time I tried the New 2009 Pro V1, I couldn't believe how much distance I gained off the tee.  It still carries well, but when it hits the ground it takes off.  I hit some 3-woods that I couldn't believe how far they went.  It feels like it's coming off the club faster.” - Jeff Sluman

“I shot 4-under the first day I put the New 2009 Pro V1x into competition at Kapalua.  When I made the first putt I hit from 10 feet, I knew it was going to be a good ball.  I drove it great, and the little shots under the wind worked real well.  The hard wind at Kapalua is a tough place to put a new ball into play for the first time, but I practiced with it a few rounds, played with it in the Pro-Am, and then to get it in under the gun with 4-under was a great start for me and the new golf ball.” Davis Love III following the first round of the season-opening Mercedes-Benz Championship.
He finished 2nd at the event.

“The more I use the New 2009 Pro V1x, the better I like it.  It had a soft but solid feel from the first time I tried it.  I've noticed improved playability with my irons and I'm able to hit different types of shots.  With this New Pro V1x, I'm able to take something off the shot and it still performs just the way I want.  I put it into play at the Sony Open, the first week I had it.” - Arron Oberholser 



The New 2009 Pro V1x works great, particularly in the wind.  It has a more penetrating ball flight and holds its line better than the previous model.  I've gained distance off the tee and really like the ball flight I'm getting with both my metals and irons.  I think it is a great ball.  Thumbs up all around.” - Joe Ogilvie

TWO HOPES TO BE BETTER THAN ONE: UST (United Sports Technologies) has combined operations and is assuming responsibility for the sports division of its parent company, Mamiya-OP.  The combined operations will be known as UST Mamiya.

“By consolidating U.S. and Japanese engineering expertise with the latest technological advancements in materials, process quality and management tools, the new company will become a worldwide leader in innovative, premium performance golf shafts,” said Satoru Suzuki, president and chief executive officer for UST Mamiya. “Both UST and Mamiya-OP brands are widely recognized in their respective markets, but now will become more global in nature, soon to be widely recognized throughout the world and better able to compete in every market, at every level.”

Gene Simpson, a co-founder of UST, has been named chief operating officer for the new company and has the responsibility of overseeing day-to-day operations internationally. “By assembling the best talent and combining key resources of these two global corporate divisions, the new UST Mamiya will be better positioned to meet a broader set of customer needs, strengthen market presence globally, leverage existing distribution channels and achieve improved operational efficiencies,” said Simpson.

UST Mamiya logos will begin appearing immediately on global marketing materials as part of the transition period, and global infrastructure initiatives will be finalized in the spring, and then implemented late second quarter of 2009 the company said.

WHAT’S IN A NAME?? Graphite Design debuted its new YSQst, Stabilized Tip shafts at the PGA Merchandise Show. According to the company, the YSQst Stabilized Tip features a more stable and stiffer tip to launch the ball lower and create the perfect descent angle to maximize distance for the players with 90 + swing speeds. Graphite Design has incorporated ACI technology into the YSQst, it said, to enhance the feel and stability of the shaft.

“We designed the YSQst shaft for the stronger player,” commented Tim Gillis, vice president, sales & marketing, Graphite Design. “The ideal descent angle for maximum roll is 35 to 44 degrees and players with higher swing speeds can achieve that using this shaft design.”

The YSQst is available in 65 and 75-gram models. The company didn’t reveal a price or date of availability of the product.

STOCK WATCH: It appears that change is going to need some time before it finds its way into the world for Americans. Case in point: Federal regulators closed three banks in a single day last Friday, as the ongoing credit crisis showed no signs of subsiding.

Utah's MagnetBank became the fourth bank failure of the year, and the Federal Deposit Insurance Corp. (FDIC) was forced to directly refund depositors after being unable to find another institution willing to take over its operations. The Salt Lake City-based institution had reported total assets of $292.9 million as of Dec. 2, and $282.8 million in total deposits.

The FDIC also closed Maryland-based Suburban Federal Savings Bank, and Florida's Ocala National Bank. However, neither required refunding of deposits by Uncle Sam. Suburban Federal had total assets of roughly $360 million as of Sep. 30, and total deposits of $302 million, the FDIC said in a statement. Tappahannock, Va.-based Bank of Essex agreed to assume the entire failed bank's deposits, the FDIC said. Ocala National had $223.5 million in total assets as of Dec. 31, and $205.2 million in total deposits, the FDIC reported. Winter Haven, Fla.-based CenterState Bank has agreed to assume all of the failed bank's deposits. The closures mark the fourth, fifth and sixth bank failures of 2009, bringing the total to a staggering 31 since the start of the credit crisis.

While the calendar shows its 2009, on Wall Street it appears to be a continuation of 2008. The Dow Jones Industrial Average closed out January at 8,000.86, falling another 8.8% for the month. According to the Stock Traders Almanac's January Barometer, created in 1972, the month of January tends to predict the direction of the market with a 91.4% accuracy rate. There have only five major errors recorded since 1950 with respect to the path blazed in the opening month of the year by the barometer. This year also represents the dubious honor of being the Dow's worst performance on record for the month of January, topping an 8.6% drop in January of 1916. The correlation worked in that particular year, with the Dow ending with an annual drop of 4.19%. Perhaps (if history repeats itself) the worst might be out of the way for the sake of the performance of the blue chip index.

Meanwhile, the S&P 500 index, used by most investing professionals as a gauge of the broader market, sunk 8.6% for January. It marked the worst January performance on record for the S&P, beating a 7.6% drop in January of 1970. The Nasdaq Composite finished down 6.4% for January.

TRAVEL:

GIVE US A TRY: Bayonet Black Horse has announced new "stay and play" packages with several area resorts and hotels that are said to rival any consumer-friendly deals in the Monterey Peninsula. Through May 1, Sanctuary Beach Resort in Marina is offering a package for Dune View rooms at $189 / night (Sunday through Thursday) and $259 / night (Friday and Saturday); and Ocean View rooms at $219 / night (Sunday through Thursday) and $299 (Friday and Saturday). Price includes one 18-hole greens fee, cart and range balls, but does not include tax. Limited availability and certain blackout dates do apply.

Monterey's Casa Munras Hotel is featuring a weekday rate of $189 and weekend rate of $239 (single / double occupancy) for accommodations and golf at Bayonet Black Horse through May 6, except for blackout dates of February 11-15, April 16-19 and April 23-26.

The Embassy Suites -- Seaside package is in effect until June 25 and priced at $255 on weekdays and $305 on weekends (single / double occupancy). It includes one 18-hole greens fee, cart and range balls at Bayonet Black Horse, plus cooked to order breakfast and buffet at the hotel, two-hour manager reception and USA Today delivered to the room. Blackout dates are February 12-15, April 16-19 and May 14-17.

"Our partnerships with Sanctuary Beach Resort, Casa Munras and Embassy Suites are important to our strategy of enticing out-of-town golfers to experience the fantastic views, ideal playing conditions and enjoyable challenge afforded by both our courses," says Dick Fitzgerald, director for Seaside Resort Development, the entity spearheading the renovation of the golf courses and additional property enhancement. "We offer a varied selection of accommodation options so visitors can make a trip to Bayonet Black Horse as luxurious or value-oriented as they see fit."

All 36 holes at Bayonet Black Horse re-opened in December after the $13 million renovation by golf course architect Gene Bates. Among some of the changes to both layouts are alterations to hole routings to reveal ocean vistas and improve playing options. Kikuyu and poa annua grasses were replaced on the tees, fairways and greens with Jacklin T1 Bentgrass, considered a rarity for the region that is expected to ensure the best lies and smoothest putting surfaces on the Peninsula.

For those interested in any of the packages, visit the websites or call the partner hotels and ask about the "Bayonet Package": Sanctuary Beach Resort, www.thesanctuarybeachresort.com, 877.944.3863; Casa Munras Hotel, www.hotelcasamunras.com, 800.222.2446; and Embassy Suites -- Seaside, (www.embassymonterey.com/home.aspx, 831.393.1115.

THE INFORMATION CONTAINED IS BELIEVED TO BE RELIABLE, BUT IT IS NOT GUARANTEED. THE OPINION EXPRESSED IS THAT OF TERRY MCANDREW AND SHOULD NOT BE CONSIDERED A SOLICITATION TO BUY OR SELL SECURITIES IN ANY OF THE COMPANIES DISCUSSED WITHIN THIS NEWSLETTER. CONTENTS OF THIS NEWSLETTER MAY NOT BE REPRINTED OR REBROADCAST WITHOUT THE EXPRESSED WRITTEN CONSENT OF TMAC GOLF

 

Last Updated (Wednesday, 03 February 2010 10:28)

 

Web Street Golf Report

VOLUME 12, NUMBER 4

Monday, January 26, 2009

THE RUB OF THE GREEN: The latest report across the pond is painting an ugly picture, potentially for UK golf courses. Industry analysts Plimsoll rates 493 of the UK’s leading 900 Golf Courses & Clubs companies as being in financial danger. Amid calls for bailouts and emergency measures, Senior Analyst David Pattison poses the question, “Should we just let them fail?” He argues, “There is no doubt in my mind that recessions catch bad businesses out. Those companies that have entered this period ill prepared have placed themselves at a distinct disadvantage. Many have grown used to running their businesses on high risk business models, propped up largely on finance.”

Chilling logic that is difficult to counter. In the company report, it shows 196 UK courses have increased their debts last year and are now carrying almost twice the level of debt Plimsoll recommends. The research stated 374 courses saw profits fall last year and 302 are losing money. Their costs are clearly ahead of sales and they have failed to respond to changes in their business structure, Plimsoll stated. On the other side of the coin, 206 managed to increase sales last year. There are 362 that are considered “well established” in operations for over 10 years go but the research suggests these are failing to adapt to the modern golf courses & clubs market and are now falling behind the rest of the market as a result.

“In summary,” stated Pattison, “it is clear that many of these 493 ‘danger’ businesses are fundamentally poor, aggressive or disruptive and are unhelpful to the market. With newly prudent banking systems in place, raising quick finance will not paper over the cracks as it once did.”

The latest research shows that the UK golf courses & clubs industry is not immune to the current crisis. The sector has overcapacity, 20% of businesses suffered a fall sales last year, with competitive pressure forcing many to see sales fall by 5%.

Pattison concluded, “The reality is, for many of these 493 danger businesses, their problems go back years, certainly long before the current UK slow down, yet they have failed to fix their problems. Darwin, in his work, ‘The Origin of Species’, recognized that extinction was an integral part of evolution, survival going to those most responsive to change.

“Our analysis is clear, not all of these 493 businesses will survive. Of those who do, very few will be in their current shape and many will be in the hands of new owners. This further supports the argument that despite the obvious tragedy of job losses, livelihoods lost and the pain of a business in decline this period is inevitable and can only be good news for the market in the long run.

The 2009 edition of the Plimsoll Analysis- Golf Courses & Clubs includes an individual analysis of each of the industry’s largest 900 companies. The report values each company as well as rating each on its attractiveness as an acquisition. Each of the 900 companies analyzed receives a unique Plimsoll rating showing the company’s strengths and weaknesses. Copies are available for £350 in PDF format plus VAT, by calling Clair Sherwood on 01642 626400. Copies can also be ordered through Plimsoll Publishing www.plimsoll.co.uk

IT KEEPS GETTING BETTER! Bridgestone Golf is enjoying a successful run with its unique golf ball fitting strategy. In fact it’s been better that the company could have ever envision. “Well beyond our expectations!,” explained Dan Murphy, Bridgestone’s Vice President of Marketing. “From a marketing sense it's a big success on two fronts: First, after Ball Fitting consumers tend to become brand disciples that spread word of mouth buzz; second, the facts and statistics generated by ball fitting are very valuable for our advertising campaign. Beyond marketing there is an unexpected R&D benefit, after 14,000 ball fittings we have generated an amazing body of data that gives us unique insights into what amateur golfers really need and want,” he continued. “This helps us focus our product offering and has lead to successful new products. The B330-RX was born from Ball Fitting. We learned that nearly 75% of golfers want to play a tour ball, but most don't have a tour swing speed to optimize the tour level products from us and our competitors. Our solution was to offer the B330-RX, which is the first tour ball, designed for amateur swing speeds. The consumer reaction has been phenomenal with the RX reaching a 6.6% market share off course in November. Clearly consumers are looking for something new that delivers real performance improvement. It seems they are getting tired of the same old line from equipment makers that goes something like ‘We pay big bucks to tour players so you should buy our products...’ Consumers are evolving beyond that tired message, especially in these challenging times. Real benefits for real players are what will win market share in the coming months and years,” Murphy predicted.

As far as the battle within the trenches, Bridgestone has found more than its share of success, Murphy said. “Our experience is that we can help 74% get longer, straighter drives without sacrificing greenside playability,” he explained. “That leaves about 26% that are already playing a ball that is right for their game. In those circumstances when we can't show improvement we tell the consumer to keep playing what they have even if that is a competitive brand. The fact of the matter is many golfers play the wrong ball for their game and  it is relatively easy for us to show them improvement.”

Consumers, according to the feedback they provide back to the company also supports it success. “Through ball fitting golfers realize they can improve their performance by playing a ball that is right for their game,” Murphy told Web Street. “The Bridgestone Ball Fitting Challenge is all about real results from real players.”

Bridgestone is making another step with its marketing strategy on the ball fitting front. Rather than talking the talk, Bridgestone Golf is showing how others are walking the walk. Click here to see more.

NO SURPRISE, THERE’S A TWIST: Life can be summed up as a series of adjustments. Perhaps no more so is that true given the harsh economic realities all Americans are facing in 2009. The golf business isn’t any different and in fact the product defining 2009 has a few more changes up its collective sleeve.

Earlier, Nike Golf announced the introduction of its STR8-FIT system in its new SQ DYMO drivers that can accommodate up to eight club head positions as reported in the December 22, 2008 Web Street Golf Report. Now the company that pioneered adjustability in modern golf clubs with the r7 quad back in 2004 has added a few twists of its own in 2009. TaylorMade-adidas Golf has incorporated Movable Weight Technology (MWT) to change the clubhead's center of gravity (CG) to promote different types of ball flights. "Five years after the debut of the r7 quad, the time has come to unveil the next revolution in golf club adjustability, a revolution made possible by a technology so groundbreaking that it warrants a passing of the torch," stated Sean Toulon, TaylorMade's executive vice president of innovation in a prepared statement. "That's why this driver isn't the next in the line of r7, but rather the first in the line of R9."

Inside the R9 is Flight Control Technology, or FCT for short. With the twist of a wrench, FCT allows players to change the R9's face angle, loft and lie angle. The clubhead still features three weight ports and comes equipped with one 16-gram and two 1-gram weights. But the R9 driver requires a new white wrench (which is included) that must be used with both the FCT bolt and the movable weights. This wrench and this wrench only must be used with the R9 driver because the FCT bolt requires 40 inch-pounds of torque to tighten fully, TMaG said; older MWT wrenches deliver only 30 inch-pounds of torque

"The R9 driver offers eight positions, and changing from one position to another is easy and takes only a matter of seconds," said Dr. Benoit Vincent, TaylorMade's chief technical officer. "When changing, it's important to recognize that as the face angle closes, the loft increases; and as the face angle opens, the loft decreases."

The R9 driver features a new clubhead shape that is best described as a cross between the r7 SuperQuad and the r7 Limited – a triangular shape. The R9 driver is equipped with a brand new 65-gram Fujikura Motore graphite shaft. Called High Inertia Tip (H.I.T.) technology, it's characterized by an optimally designed tip architecture that is supposed to promote an added kick through the impact zone to promote increased ball speed and distance.

The R9 driver is offered in 8.5, 9.5, and 10.5 degree lofts (9.5 and 10.5 left-handed), and in X, S, R and M shaft flexes. The manufacturer’s suggested retail price is $500, and availability begins on March 20, 2009. The company also has Tour Preferred version, R9 TP driver is offered in the same lofts and in X, S, and R shaft flexes. The manufacturer’s suggested retail price is $600 for this one and it too is expected to debut at retail on March 20, 2009.

SIDENOTE: Pat Perez posted an opening 11-under par, 61, last week and spoke to the media after his impressive round. Among the many topics covered, Perez discussed the new R9 driver.

“I'm not just saying this because I play it, but I'm telling you it's the best driver I've ever hit,” Perez said. “And I've tried a lot. It's got the screw in at the bottom, you screw the shaft in deal. I got it on Monday, I told the guy I had to try this thing. And it looks like the old 510 head, which was my favorite before that. You keep moving on with all the stuff. But I'm telling you, this is the best driver. I was playing the Limited before, and this is unbelievable to start with. It's unbelievable.” Perez averaged 290 yards in driving distance for his blistering round of 61, which ranked him 66th in the field. His driving accuracy was 77, good enough for a T64 in the field. He averaged 279.8 yards at the Sony, his first event of the year.

YOU CAN NEVER HAVE TOO MUCH: TaylorMade has a few more goodies to tempt avid golfers, if they have the financial resources, in 2009. The company has also added two new fairway wood models, the R9 and R9 TP, to complement the driver offerings. The fairway woods also provide eight club head positions players can choose from. The R9 fairways are built with a 70-gram Fujikura Motore graphite shaft. Loft options include: Tour 3-wood (stronger lofted at 13°), 3-wood (15°), 4-wood (17°) and 5-wood (19°); X, S and R shafts in both right- and left-handed models. Availability begins on March 20, 2009 at a manufacturer's suggested retail price (MSRP) of $275 per club. The TP version (Tour Preferred) carries an 85-gram Fujikura Motore F1 and an MSRP of $360.

Meanwhile, TaylorMade is reintroducing its hybrid products. The company which self proclaims it created the category six years ago (I’m sure the folks across the street at Cobra have something to say about that as they believe their Baffler was the first of its kind), is calling its latest simply Rescue 2009.

"As hybrids have evolved since the Rescue Mid was created, they've gotten bigger. The heads have lengthened from front to back and from heel to toe, and the soles have expanded," said Harry Arnett, TaylorMade senior director of the metal wood category. "Compare an original Rescue Mid to a 2008 Burner Rescue hybrid and the difference is plain to see. These changes were made for good reason - to move the CG lower and deeper and to increase MOI and forgiveness. Unfortunately they made the head bigger, bulkier and more like a fairway wood, when one of the most attractive of the Rescue Mid's qualities was that its head was bigger than an iron's, yet much more compact than a 5-wood's. That's why we've harkened back to our roots when we designed our newest hybrid by borrowing liberally from the original Rescue Mid while at the same time incorporating with our newest technologies. We call it, simply, the TaylorMade Rescue 2009."

Two versions are available, the standard Rescue and the Rescue TP, the key difference being that the Rescue TP hybrid features the same TaylorMade Flight Control Technology (FCT) that's in the R9 driver and fairway woods, while the standard Rescue hybrid does not. FCT gives the player the ability to change the Rescue TP's face angle, loft and lie angle, which has never before been possible with a hybrid of any kind.

Availability begins on May 1st at a manufacturer's suggested retail price of $199, while the Rescue TP hybrid carries an MSRP of $249.

The company isn’t stopping here as it has created the most dynamic looking, best performing iron ever to bear the name TaylorMade, by its own estimation with the advent of the Burner 09.

"Our performance goal was to create an easy-to-launch iron that delivered 'meaningful distance,'" said Sean Toulon of TaylorMade. "What do we mean by that? Longer distance that's consistent from club to club, for one thing. We wanted to make sure that every club was consistently longer than the club before it, and that the distance gaps between each iron are even, because it doesn't help if you hit the 6-iron 15 yards longer than your 7-iron, but only hit the 4-iron five yards longer than the 5-iron. Meaningful distance also has a lot to do with control. Extra yardage with your irons doesn't mean anything if you're missing greens with crooked shots or hitting low bullets that skip hard and roll over the back. To deliver meaningful distance, the Burner 09 irons had to promote high, straight, long-carrying, soft-landing ball flight. There could be no sacrifice in the quality of launch angle, spin-rate, peak height and landing angle in our pursuit."

Among the ways the company outlined that it has created the performance enhancements Toulon described began with thinning the clubface as much as possible to make it more flexible and faster for higher COR. A custom 450 stainless steel alloy is used for added strength, allowing 1.9 mm thickness across most of the face. Expanding the perimeter to help increase the MOI over previous TaylorMade irons increased the size of the head. The width of the sole (unusual for a long-iron) was increased to pull the CG location low and far back away from the clubface. Both of the last two items have regularly been featured in Callaway Golf irons, which implies TaylorMade is looking to attack its rival’s market share in the category with its first time inclusion of these features and corresponding benefits. TaylorMade said it also increased the degree of offset in the Burner 09 irons in order to make it easier to square the face at impact.

According to TaylorMade’s test results, many players gained as much as 15 yards in distance with the Burner 09 4-iron compared to their current 4-iron, including tour professionals. The irons across the set feature longer-length shafts, but the company didn’t provide specifics as far by how much over industry standards.

"The result blew us away," said Bret Wahl, TaylorMade's senior director of iron development. "We created a 4-iron that's as easy to hit as our Rescue clubs and which promotes greater accuracy. We applied these same principles to the 3-iron and 5-iron and got the same result, and that's how we succeeded in what are by far the easiest-to-hit long-irons that we've ever created. They deliver the highest MOI of any by TaylorMade. That, combined with their thin, fast 1.9-millimeter face, also makes them exceptionally long. It's important to note that the thin face saves approximately 10 grams, which is redistributed to the perimeter to contribute to the high MOI."

The new Burner irons are available in full sets that include 4-iron through attack wedge. Burner 3-iron, sand wedge and lob wedge are also available. But all this technology is going to cost you. The manufacturer's suggested retail price (MSRP) for a set with steel shafts is $840; a graphite shaft is $1,080. MSRP for individual clubs is $105 with steel shaft and $135 with graphite shaft. Availability is slated for March 20, 2009.

"The new Burner irons are astonishingly long, straight and easy to launch, and will be played by everyone from tour pros to 29-handicaps," Toulon added. "It's the next great iron from TaylorMade."

WHY NOT ANOTHER? Three months after Cobra Golf introduced its L5V driver (which carries a street price of $399), the company has added something else for consumers to consider. The 2009 King Cobra S9-1 drivers, which Geoff Ogilvy used to win the Mercedes Championship) promises customization to the masses. Cobra said its latest offering has been designed for player type and ball speed.

"We started from scratch and developed a completely new outer head shape and internal geometry for the S9-1," stated Scott Rice, Cobra Golf's Director of Research and Development in a prepared statement. "Each model has a distinct Center of Gravity location to provide optimum ball flight conditions needed by different player types and ball speeds. We further adjusted the face geometry for greater efficiency on off-center hits, and paired the heads with a brand new line of proprietary, high performance Aldila DVS-HL and Graphite Design Tour AD shafts."

The S9-1 ($375 MSRP) is available in six Speed Tuned models: F, M, M Offset, Senior's, Women's and Offset Women's. The F model is available in lofts of 9.5° and 10.5°, the M in 10.5° and 11.5°lofts, and the M Offset in 9.5° and 10.5°. The  S9-1 Seniors' Driver loft is 11.5°, while the Women's Driver loft is 11.5° and the Offset Women's model is available in only 13.5°.

"The new S9-1 drivers are the best-looking, best-sounding and best-performing drivers Cobra has ever produced," said Brian Zender, General Manager of Cobra Golf. "There's a version for every type of player, from amateur to pro. It's already made a believer of Geoff Ogilvy, who used the S9-1  driver  to  capture  the  2009  PGA  Tour's  opening  event, the Mercedes-Benz Championship."

There is also a S9-1 Pro version offered in two models: A deep-faced S9-1 Pro D to promote a mid-high launch with low spin and a shallow-faced S9-1 Pro S to allow for higher launch with low-to-mid spin rates. Both S9-1 Pro Drivers ($480 MSRP each) are available in lofts of 8.5°, 9.5° and 10.5° with Cobra/Matrix Ozik Xcon 6 shafts. Availability through golf retailers is slated for early February 2009.

RUBBER NECKERS: Gear heads have something else they can look forward to. Last year several equipment companies introduced interchangeable drivers. While it didn’t necessarily have the commercial appeal some were thinking, it provided the equivalent of a smorgasbord for those who love to tinker with their clubs. Now this platform is being introduced to putters in 2009

YES! Golf is about to introduce an interchangeable hosel system with two putters at the PGA Merchandise Show. Golfers will be able to custom fit their putter based on personal preference of the look and style of the hosel. The interchangeable hosel C-Groove putters, Tracy III Plus and Lizzy Plus, are precision CNC milled, the company said and can accommodate one of four hosel options too improve the look and dynamic balance of the putter.

Also, YES! said it will be adding three new blades and three new mallet putters for 2009.  The C-Groove putters will range from traditional looks to more high-tech designs. The new putters are designed to accommodate all golfers based on their personal preference. No word yet on pricing for the interchangeable putter hosels, but its a safe bet that it will be proprietary to only the company’s models as has been the case thus far with drivers. It wouldn’t take a leap of faith either to expect to see a premium price tag attached for the unique feature. But given the economic realities everyone is forced to live with these days, its likely going to be a challenge to see wide adoption of the application at the consumer level. Nevertheless, it should stand out and offer a chance to start a dialogue at retail, for those who decide to carry it.

FIRST THINGS FIRST: Playing one shot at a time is catch phrase in golf that people don’t always appreciate. In other words, you get can’t get ahead of yourself, which can be easier said than done, especially in these tricky economic times. One person who is sticking to this motto is PGA Tour Commissioner, Tim Finchem when it comes to the plight of the economy and how it may spill over to sponsorship of its events. “I think we will lose some sponsors in this cycle, the next couple years. I don't think there's any question about that,” Finchem said. “The challenge is to retain a hundred percent sponsors. You have to replace sponsors in a downturn, and with the economy being as dour as it is, that will present some real challenges. I'm always an optimist, I think we will, but we won't know until we're done doing it. So we are very concerned about that.”

HAIL TO THE CHEIF: Arnold Palmer has been known to run with a fast crowd of people over his lifetime. The King has rubbed shoulders with a president or two in his day and teed it up with the commander and chief, now and then, over his illustrious career. “I've had the good fortune to play golf with quite a few Presidents. Jerry Ford was good and he was a personal friend. Oh, you could almost name it from there. I think the man that I spent the most time with on the golf course and personally was President Eisenhower. I played a lot of golf with him, I played exhibitions with him for the Heart Fund, and after a number of years when he was told he shouldn't play golf any more, we used to just visit. I would go to his house and we would spend a couple hours in the afternoon just talking and maybe sipping on a beer or something like that. So he and I were, I would say, very close. He was one of my close friends,” Palmer shared.

The King, who had his own equipment company at one time and today is still a member of the Callaway Golf staff made a point to watch the swearing in of the 44th president of the United States and shared a few of his thoughts on the next leader of the country.

“I watched Obama take the oath and I watched most of his remarks. And I thought they were fine,” Palmer said. “I think he's starting out pretty good. He's got a pretty rough task in front of him. And I hope he can stick with it. I hope that he can go down the middle as he has indicated he might and get some things done. Those of us in the golf business are feeling a pretty radical affect on our business in the game. It doesn't matter whether it's selling equipment or whether it's building golf courses, or whether it's sponsoring golf tournaments.”

WHAT’S NEXT? Callaway Golf Company (ELY: NYSE) announced that full year net sales for 2008 are estimated to be $1.117 billion compared to $1.125 billion in 2007. The resident of the New York Stock Exchange said it expects diluted earnings per share to range from $0.93 to $0.95 (on 63.8 million shares outstanding) for 2008. The company will release its full results on Tuesday, January 27.

"As we begin 2009, we are anticipating continued adverse global economic conditions and are encountering significant headwinds from unfavorable foreign currency exchange rates which we expect will have a significant effect on our international results in 2009,"stated George Fellows, President and CEO of Callaway Golf. "Despite these macroeconomic conditions, which are beyond our control, our brands and our operations remain strong. We have our strongest line-up of new products ever for 2009, we continue to benefit from the many gross margin and operational initiatives we have implemented over the past three years, and we will continue to drive incremental gross margin savings as we embark on our next round of initiatives in 2009. Additionally, as we demonstrated in 2008, we will carefully manage our costs and inventories throughout the year and will take the necessary actions to maximize our financial results for our shareholders in whatever economic conditions persist."

NEVER TOO LATE FORE CHANGE: The Northern Trust Open has found a way to honor Charlie Sifford and his role in breaking down golf’s “Caucasian only” rule more than four decades ago. Each year, beginning with this year’s tournament on Feb. 16-22, 2009, the tournament has created the Charlie Sifford Exemption, which provides a sponsor exemption to a top golfer who represents the advancement of diversity in golf and wouldn’t otherwise be eligible to compete in the event. The recipient of the new exemption is scheduled to be revealed by Rick Waddell, president and chief executive officer of Northern Trust, Northern Trust Open Tournament Director Tom Pulchinski and Sifford himself on Feb. 18 at the Riviera Country Club in Pacific Palisades, California.

“This is a fitting honor for Charlie Sifford, who 40 years ago overcame great obstacles to win what we now call the Northern Trust Open,” Waddell said. “Our hope is that the Charlie Sifford Exemption will raise awareness of Mr. Sifford’s achievements while continuing to broaden the game’s appeal. Our company's principles of service, expertise and integrity align perfectly with the PGA Tour's goal of making golf fun, challenging and rewarding for everyone regardless of background.”

Candidates for the Charlie Sifford Exemption will be identified by a variety of sources, including the PGA Tour, PGA of America through the PGA Minority Collegiate Golf Championship, Nationwide Tour, The First Tee, World Golf Foundation, United States Golf Association and the Bill Dickey Scholarship Association.

“This is a great day,” Charlie Sifford said. “I always just wanted to get a chance to play, and with the help of many I was able to pursue my dreams as a professional golfer. I am honored beyond words to see this exemption help the next generation of top golfers.”

JUST A LITTLE OFF! PrideSports is taking an alternative approach to its business, specifically with its latest product introduction. Consider it working outside the box. The company, which is known for its wooden golf tees has created the PTS Offset, the first plastic golf tee to feature a 30-degree offset angle. The new proprietary design, according to the company, allows the tee to increase ball visibility, while creating contact with the club at its maximum speed and optimum trajectory, resulting in longer drives. According to PrideSports, the PTS Offset is "the most advanced tee allowed by the USGA."

The 30-degree "attack angle" design promotes an ascending blow, designed to minimize spin and promotes reduced tee friction, according to the company. "As a complement to our longstanding wooden golf tee business, and the popular PTS line of tees, we have developed the innovative PTS Offset tee, which offers performance features unlike any tee in golf today," said Joe Zeller, President, PrideSports. "In meeting USGA specifications with our design, the PTS Offset tee provides a launch angle and contact point that has never before been possible, resulting in longer, straighter drives."

The PTS Offset also features the color code system, a 2-¾" tee that features a yellow locator bar and a 3 ¼" tee that features a blue locator bar. The locator bar is intended to help players identify how far to put the tee in the ground, thus increasing height consistency every time.

STOCK WATCH: It was a historic week in the United States of America as the 44th president was sworn in. The platform of the people’s choice was predicated on the word, change. Apparently Wall Street didn't get the memo. The dawn of the Obama presidency could not shake Wall Street from its dejection over the banking industry's growing problems as it closed below 8,000 on the day he became the country’s commander and chief.

For the week the blue chip index finished lower by 2.5%, the Nasdaq lost 3.4% and the S&P 500 dropped 2.1%.

Meanwhile, as a sign of the times and the wealth that has been lost in recently, the New York Stock Exchange announced on Friday that it will temporarily lower the minimum standard required for delisting of any company based on market capitalization. The standards will be relaxed from an average global market capitalization over a consecutive 30 trading-day period of $25 million down to $15 million. The provision is in effect through April 22, 2009. Unless otherwise amended, the previous requirement of maintaining a valuation of $25 million will go back into effect, thus perhaps implying higher ground could be in order for equity values, but I wouldn’t hold my breath on that one...

TRAVEL:

WILL 2008 BE CONSIDERED BE THE GOOD OLD DAYS? The U.S. hotel industry finished 2008 with a 60.4-percent occupancy rate, an average daily rate (ADR) of US$106.55 and revenue per available room (RevPAR) of US$64.37, according to data released today from Smith Travel Research (STR). The occupancy rate was 4.2 percent lower than industry-wide occupancy at the end of 2007 (63.1 percent), while ADR was 2.4 percent higher than 2007 (US$104.04), and RevPAR was 1.9 percent lower than 2007 (US$65.61).

“After a reasonably good start to 2008, the industry fell into an extremely negative pattern during the last four months of the year,” said Mark Lomanno, STR’s president. “The data during the last quarter of 2008 experienced a dramatic decrease, and that led to the disappointing year-end numbers.”

Lomanno doesn’t expect things to get better any time soon. “If we didn’t hit bottom during the last quarter of 2008, we came pretty close to it,” he said. “We expect the industry to bounce along at these levels for the next few months. Our expectations are that the industry should begin experiencing some relief in the second half of 2009 as the year-over-year comparisons get much better after the awful 2008 results.”

For the year, only two of the Top 25 markets posted occupancy gains: New Orleans, Louisiana (+8.6 percent) and Houston, Texas (+2.6 percent). Meanwhile, Phoenix, Arizona (-11.2 percent), Norfolk-Virginia Beach, Virginia (-8.7 percent) and Tampa-St. Petersburg, Florida (-7.2 percent) suffered the largest occupancy declines among the Top 25 markets.

All of the Top 25 markets had positive movement in ADR. Leading the way was Houston (+9.4 percent), Denver, Colorado (+6.3 percent), San Francisco-San Mateo, California (+5.4 percent) and Nashville, Tennessee (+5.0 percent). The markets’ performances in RevPAR were varied. Top RevPAR gainers: Houston (+12.2 percent) and New Orleans (+10.1 percent). Phoenix (-8.3 percent) and Norfolk-Virginia Beach (-8.1 percent) had the largest RevPAR declines among the Top 25 markets.

During December 2008, the U.S. hotel industry saw year-over-year decreases in occupancy (-6.8 percent from December 2007 to finish the month at 45.3 percent), ADR (-3.2 percent from December 2007 to finish the month at US$99.42) and RevPAR (-9.7 percent from December 2007 to finish the month at US$44.99).

Luxury hotels were hit the hardest during the month, as the segment’s year-over-year occupancy dropped 11.5 percent to 52.1 percent, its ADR fell 7.3 percent to US$294.40, and its RevPAR declined 17.9 percent to US$153.41. However, each of the individual chain scales declined in nearly all three major measurement categories; the exception was the Midscale-without-Food-and-Beverage segment’s flat (0.0) performance in ADR.

Houston (+8.5 percent to 57.3 percent), Orlando, Florida (+1.2 percent to 61.3 percent) and San Francisco-San Mateo (+0.3 percent to 62.7 percent) were the only markets among the Top 25 markets that had occupancy gains. Phoenix (-16.4 percent to 43.9 percent), San Diego, California (-11.9 percent to 47.9 percent) and Atlanta, Georgia (-11.3 percent to 43.7 percent) suffered the largest year-over-year occupancy drops.

San Francisco-San Mateo (+7.7 percent to US$142.51), Houston (+6.8 percent to US$94.03), Washington, D.C. (+0.3 percent to US$135.78) and Chicago, Illinois (+0.2 percent to US$113.46) were the only markets among the Top 25 markets that achieved ADR growth. New York, New York (-10.0 percent to US$297.15), Atlanta (-9.5 percent to US$79.85) and Oahu Island, Hawaii (-7.4 percent to US$171.56) had the largest drop-offs in ADR among the Top 25 markets.

THE INFORMATION CONTAINED IS BELIEVED TO BE RELIABLE, BUT IT IS NOT GUARANTEED. THE OPINION EXPRESSED IS THAT OF TERRY MCANDREW AND SHOULD NOT BE CONSIDERED A SOLICITATION TO BUY OR SELL SECURITIES IN ANY OF THE COMPANIES DISCUSSED WITHIN THIS NEWSLETTER. CONTENTS OF THIS NEWSLETTER MAY NOT BE REPRINTED OR REBROADCAST WITHOUT THE EXPRESSED WRITTEN CONSENT OF TMAC GOLF

 

Last Updated (Wednesday, 03 February 2010 10:31)

 

Web Street Golf Report

VOLUME 12, NUMBER 3

Monday, January 19, 2009

SOBERING: The fourth quarter proved to be a difficult one for a prominent golf retailer. Unfortunately, it appears it isn’t expected to improve in the near term either. The general state of retail sales in a broader sense has increasingly come under pressure. U.S. retail sales fell a sixth consecutive time in December as it tumbled by 2.7% in the final month of 2008, from the previous month on a seasonally adjusted basis, the Commerce Department reported. November’s dropped 2.1%, revised down from an originally estimated 1.8% decline. October was also revised lower, to a drop of 3.4% from a previously reported drop of 2.9%.

Sales last December slumped 1.8% at furniture retailers; 2.5% at clothing stores; 1.0% at electronic stores; 2.2% at eating and drinking places; 0.4% at sporting goods, hobby and book stores; 1.3% at general merchandise stores; 1.4% at food and beverage stores; 2.9% at building material and garden supplies dealers; and 1.9% at mail order and Internet retailers. Unfortunately, for Golfsmith International Holdings, Inc., (GOLF: NASDAQ) the fourth quarter of 2008 saw double digit fall off in its revenues (13.7%), comparable store sales (17.3%) from a year ago and revenue from its direct channel (23%). The company pre-announced its operational results as it participated in an ICR Investment conference at the St. Regis Monarch Beach Resort & Spa in Dana Point, California.

Marty Hanaka, president, chairman and chief executive officer of Golfsmith stated in a company press release, "Sales and traffic were negatively impacted as consumer spending declined during the holiday season. We continue to work diligently to manage expenses and inventory levels during these difficult times. In addition, we will continue to approach our store opening plans and capital spending in a prudent manner as we focus on cash preservation.”

Golfsmith said net revenues for the 2008 fiscal year were down 2.3% to $379.1 million compared with $388.2 million for fiscal year 2007. Total inventory, it said, declined approximately 5 to 7%, and declined approximately 8% on a per store basis. The company said its comparative store sales in its chain for the fiscal year were off 6.3%; despite the sharp drop off experienced in the fourth quarter.

Clearly the fourth quarter has signaled that times have changed for the business even if most of the country was capable of playing golf due to the seasonal nature of the game. It also begs the question of how its sales will be affected in 2009. “We want to be careful. We want to be cautious and preserve our cash and not do something we would regret later. We are preserving our dollars in our bank account,” said Hanaka.

According to the company’s presentation at the investment conference, its outlook in ’09 is that the negative trend is expected to continue through the spring. “I don’t know if any of us really knows but we are planning for the worst,” Hanaka stated in his presentation to the investment community with respect to when business conditions may improve. Golfsmith intends to drive its profit growth by improved inventory production, payroll leverage and cost containments. The company said it will manage its skus and eliminate some but didn’t identify the brands or models in either the hard or soft goods categories it intends to reduce. The focus is expected to reward products that exhibit sell through versus those that are unable to. “We are reducing the sku counts in some categories. We felt we had too many brand and they get blurred and are not meaningful,” said Sue Gove, Chief Operating Officer. “We are focusing on top selling brands.”

In the meantime, Golfsmith was adamant that its focus is towards preserving its cash position and it will pause on any major expenditures for the time being. It will also focus on improving its working capital situation as it manages the difficult economic environment that is accentuated by a very soft consumer market.

The news is never welcome under any circumstances but given the nature of the industry, its timing isn’t what equipment manufacturers certainly are wanting to hear. As with each New Year, the first quarter ushers in a host of new products in nearly every category from all equipment companies. Traditionally the retail pipeline is filed with these new items in anticipation of the selling season that commences across the country by the second quarter. Therefore, major manufacturers who need not fear their lines will no longer be in Golfsmith stores must be forced to contend with either a reduction in line offerings and or smaller initial orders as the retailer takes a wait and see attitude towards consumer sales and which products across the spectrum are more popular than others.

The Company said expects to release its full earning results for fiscal 2008 during the first week of March 2009.

THE NEW MATH: Nike Golf has three of a kind coming your direction for the golf season. That is golf balls, which carry the One name. “We now have three premium level golf balls for consumers to chose from. The development process for each of these balls was inspired by the testing we conducted with our Nike athletes on the PGA Tour as well as comprehensive testing we executed with consumers,” said Rock Ishii, Product Development Director for Nike Golf. “We diligently explored various levels of head speeds and launch conditions. We listened to our athletes. We listened to consumers. The results has been what I think is the most powerful Nike One Ball Series we’ve ever created.”

The Nike One Tour is a four-piece construction that features optimized compression and cover for increased distance performance with all clubs, according to the company. It has a progressive density core, Nike said that has been optimized to increase velocity, control excess spin and has an improved feel to it. It has a seamless urethane construction with a 378-dimple design to aid in a long, predictable flight, the company said. While Nike is now just introducing the ball, it has already been to the winner’s circle more than once. “My driving distance has improved tremendously with the new Nike One Tour ball,” said Trevor Immelman. “I already have had so much success with it, including my Masters win. Since switching to it, my distance and accuracy has been terrific. It’s the best ball I’ve ever played.” Paul Casey won using it at the Abu Dhabi Championship last week as he bean his 2009 season with a victory.

The new Nike One Tour ball is engineered for players who possess a swing speed in excess of 90 mph and has a compression level of 88, the company said. It was created to promote a mid to highball trajectory. It promises the ultimate in Tour performance and appears to have achieved its objective at least with Immelman’s testimony.

The Nike One Tour D is a three-piece construction that has a softened progressive density core built into it. It too has a seamless construction but with a 336 dimple pattern. Nike said the ball reduces excess driver spin thus making shots longer even with off-center hits. Its said to have a penetrating ball flight that is focused more towards a mid trajectory level. Its compression rate is 80, Nike said.

The Nike One Vapor is also a three-piece multi-layer construction that is for players who have a swing speed of 80+ mph. The lower compression (70) will benefit average swing speeds, Nike said. It is built with Power Transfer Technology, which delivers longer distance and improved control.

The Nike One Tour carries an MSRP of $58 per dozen with an anticipated street price of $44.99. The Nike One Tour D also has an MSRP $58 and street price of $44.99, while the Nike One Vapor ‘s MSRP is $40 and expected street price will be $29.99.

CROSSING THE LINE: An early theme emerging in 2009 centers on efficiency. As the business world is changing in front of our eyes, it’s paramount to manage waste as more effectively than ever. Adams Golf (ADGF; NASDAQ) is taking a different approach towards building performance enhancements into its latest driver creation and efficiency is one way to describe what it has created. The Speedline drivers were designed to create less drag and airflow turbulence, Adams said, thereby increasing club head speed and distance. The aerodynamic shaping of the product has manifested a, “ three to four M.P.H. faster club head speed and three to nine yards more distance.”

Backed by data from the Oran W. Nicks Low Speed Wind Tunnel at Texas A&M University and in consultation with aero-physicists, Adams Golf engineers created a patent pending design for Speedline that includes an aero-shaped crown, heel and toe scoops, and improved face-to-body transition, all of which minimize drag and improve airflow around the head. Further Computational Fluid Dynamics (CFD) testing proved that the advanced Speedline driver design performed with attached and efficient air pressure on the body, thereby increasing club head speed. This technology is forecasted, according to Adams Golf, to have the same game-changing effect on the industry as high-COR drivers.

"We saw an opportunity when the extreme geometry drivers continually tested with higher drag and lower club head speed," said Scott Burnett, Director of Advanced Product Development. "By changing the aerodynamic properties of the face and crown in order to keep the airflow attached, we were able to deliver a significant distance advantage for the average player and tour pro alike."

The theory has translated in the real world as the Speedline Driver garnered its first win back in October with Bernhard Langer at the Administaff Small Business Classic in The Woodlands, Texas. The success continued in November when it was in the hands of the winner of the Champions Tour Charles Schwab Cup Championship in Sonoma, Calif. and the LPGA's winner of the Hana Bank KOLON Championship in Korea, neither of which are Adams Staff players which therefore prevents the company from using their names in its marketing efforts. Andy Bean and Candie Kung are the two unidentified players who won the respective events.

Speedline will ship to golf shops in early February and are available in two versions, Standard and Draw. The suggested retail price is $399.99.

Adams Golf has also included Speedline Hybrid-Fairway Woods introductions for 2009. The product feature the playability of a hybrid and the distance of a fairway wood, the company said. By utilizing internal heel-toe weighting and advanced Boxer Technology, the hybrid-fairway woods offer a moment of inertial (MOI) that is said to be 12% higher than conventional fairway woods, according to Adams Golf. The increased sole camber from heel to toe also makes the Speedline Hybrid-Fairway Woods easy to hit from the fairway and from a variety of lies, according to the Plano-TX. based business.

"We've consistently seen tour pros switching from traditional fairway woods to our hybrid-fairway woods because of the dependable performance and playability similar to their hybrids. If a player likes hybrids then they will love these fairway wood replacement clubs," said Tim Reed, Vice President of Research and Development. The suggested retail price for the Speedline Draw Hybrid-Fairway Woods is $229.99.

HE’S BACK: David Toms is looking to recapture some of his old form and in turn some magic in 2009. He has decided to return to Cleveland Golf/Srixon after a two-year hiatus and will once again be carrying a complement of Cleveland clubs in his bag. Toms, who signed a multi-year contract with the company, will also wear a Cleveland hat and have his caddy carrying a Cleveland bag on top of using its clubs.

“I’m excited to be back with Cleveland and involved with the company I’ve had so much success with in the past,” said Toms. “Eleven of my 12 wins were achieved when I was playing with Cleveland equipment and now that I’m back, I hope to add to that number in the future.”

Toms is said to be reuniting this season with his longtime caddie, Scott Gneiser, who was on his bag during the same 11 wins earned while under contract with Cleveland Golf.

“We’re thrilled to have David back representing Cleveland Golf,” said Greg Hopkins, President/CEO of Cleveland Golf/Srixon. “When a player has the success that David has had using our equipment, it brings to mind that old adage ‘If it ain’t broke, don’t fix it.’ We all believe that David is fixed on having a big year in 2009.”

BU$INE$$ AS U$UAL? Three days after TaylorMade announced it had reduced its workforce by 70 employees, due to the deteriorating economic conditions, it announced additions to its Tour Staff of professionals. The company has added 17 new players for the 2009 season. Some you may recognize and others, well maybe not. Nevertheless, you have to wonder how many employee salaries that were eliminated for cost savings reasons does it take to pay for one or all of these:

• Arjun Atwal

• Matthew Borchert

• Paul Goydos

• Scott Gutschewski

• Richard S. Johnson

• Frank Lickliter II

• Steve Lowery

• David Mathis

• Leif Olson

"TaylorMade is known as the No. 1 Driver on the PGA Tour and we're proud that these players have selected our company and to join our existing stable of outstanding players," stated Chuck Presto, TaylorMade-adidas Golf senior vice president of global sports marketing in a company press release. "Tour usage is the ultimate validation for our company's products and we are flattered that the world's best players rely on TaylorMade to help them perform at their highest levels." Guess it’s a safe assumption the “sports marketing” budget isn’t undergoing any contractions due to the global economic conditions...

ALL IN: Bridgestone Golf has expanded its relationship with Brandt Snedeker to include golf clubs in 2009.  Snedeker, who used the company’s Tour B330-S golf ball since the start of his professional career will add Bridgestone Golf’s J36 Cavity Back irons (3-PW), WC Design gap wedge (52-degree), J33 3-wood (15-degree) and a Bridgestone Golf X-Drive prototype driver (9.5-degree) into his bag when he tees it up for the first time at the FBR Open in Scottsdale, AZ the week of January 29th-February 1st. He will also wear a Bridgestone Golf glove, sport the company logo on his headwear and carry a Bridgestone Golf Tour bag in all professional tournaments.

“After having my two best performances in the Majors last season, I have a tremendous amount of confidence coming into 2009, and that is only bolstered by my new club deal with Bridgestone,” said Snedeker. “Bridgestone has always provided me with a golf ball I can count on, and I am confident that being in their clubs will provide me with more consistent performance on a shot-to-shot basis.  The quality of the forgings in the irons are second to none, and the wedges provide a really great feel for shots around the green.”

Financial terms of the agreement will not be disclosed, but the company reported the contract is a multi-year deal. “2008 was a milestone year for both the Bridgestone Golf brand and Brandt,” said Shigeru Nakayama, President of Bridgestone Golf, Inc. “We are excited to have Brandt as a full-staff player in 2009 and look for big things to come.”

The addition of Snedeker to the equipment line up for Bridgestone Golf fills the void of losing Stuart Appleby who defected to Callaway Golf. However, it’s likely the company is in a similar position to that of the New York Yankees where it hasn’t experienced any incremental increases in its payroll with the addition! While Snedeker isn’t in the same category as the additions the Yankees have made to their roster, it affords Bridgestone Golf a younger player with potentially greater upside.

STEADY AS SHE GOES: The St Andrews Links Trust reported it has renewed its contract with Compass Group (UK & Ireland) Ltd to deliver tee time packages on the Old Course. Compass Group, trading as the Old Course Experience, currently delivers guaranteed tee times on the Old Course through premium golf tour programs packages and handles travel trade tee times.

Alan McGregor, general manager of the Links Trust, stated, “The Trustees took time to consider the options available to them and decided that it was clearly in the best interests of the Trust to continue to work with the Compass Group. The arrangement has made it possible for the Trust to invest in the courses and facilities over the years, which has resulted in a far better experience for golfers. In a difficult economic climate it is prudent for the Trust to renew the contract going forward.” The agreement will continue on a rolling basis.

FAT HEAD: Cleveland Golf/Srixon wants to bring a monster to your game. The company has introduced its new HiBORE Monster XLS driver, which it said boasts a face that is 16% larger than its HiBORE XLS predecessor. The latest from the company utilizes Distance Driven Geometry by lowering the crown, which in turn, lowers the center of gravity (CG) to produce the only face-centered sweet spot in golf, it said.

Cleveland said the driver features Full-Face Performance (FFP) and an additional 24 grams of perimeter weighting has enabled it to reach maximum moment of inertia (MOI) for ultimate forgiveness and stability. It is available in a Standard, Tour or Draw model and carry’s a street price of $299. It will begin shipping to retail accounts on January 29, 2009.

NEW! Cleveland Golf also introduced its latest CG7 and CG7 Tour irons. The 2009 versions promise players of all levels increased benefits in the areas of feel, distance and forgiveness. Feel, Cleveland said, comes in the form of 360° Gelback Technology; a one piece injection-molded, lightweight insert providing vibration dampening across the entire face. Enhanced distance is the result of Dynamic next generation Micro-Cavity Technology (MCT), which incorporates progressively sized micro-cavities for optimized CG location in each head.

The CG7 and CG7 Tour irons also feature heel/toe muscle weighting, which provides forgiveness with 6% greater MOI than traditional irons for better performance on off-center shots. The CG7 irons are street priced at $599 (steel) and $699 (graphite) and the CG7 Tour irons will carry a street price of $699 (steel). Both the CG7 and CG7 Tour irons will begin shipping January 29, 2009.

SEEING IS BELIEVING: The two latest additions to Cleveland Golf’s Visual Performance (VP) putter line help aid players who typically struggle with improper alignment and an inconsistent putting address position, the company reported. Many putts, according to Cleveland engineers are missed due to alignment. Dual Axis Alignment technology incorporated into the VP 109 and VP 509 putters allows players to determine when their hands move out of position and to detect when their eyes are not directly over the ball. By addressing these two issues, VP putters help to increase impact consistency while improving distance control for a truer roll on the greens, the company promised.

The new VP109 and VP 509 offer a 30% larger textured elastometer face insert for a soft but responsive feel, the company said. The low-density material, which is said to be seven times less than that of steel, also helps to move the center of gravity lower and deeper in the head, Cleveland said. An added level of customization, all VP putter models are available in standard, flat and upright lie configurations.

The Minimum Advertised Price on the new VP 109 is $109 and the VP 509 is $129. Both new putters will begin shipping on February 15, 2009.

VALIDATION: aboutGolf has announced an exclusive worldwide, six-year licensing partnership with the PGA Tour to manufacture simulators for it. Through the agreement aboutGolf said it is also granted exclusive rights to offer Tournament Players Club (TPC) courses on the PGA Tour Simulator, including the TPC Sawgrass’ THE PLAYERS Stadium Course.

“Simulator owners will have access to previously unavailable courses; courses that provide a true PGA Tour experience,” said Bill Bales, president of aboutGolf. “And indoor center owners will be able to promote their use of these exciting products to drive revenue in difficult economic times. The direct benefits to simulator owners can be significant. This partnership has validated our long-stated belief that our simulators meet the highest quality and performance standards.”

Tim Hawes, the PGA Tour’s Senior Vice President, Retail Licensing stated, “We chose to partner with aboutGolf because it is the world’s most progressive, technologically innovative indoor golf simulator company. Bringing TPC courses to life on PGA Tour Simulators is an exciting venture, and will give the PGA Tour even more visibility to golfers everywhere.”

ISLAND SHOPPING: Rife Putters has added three new models to their Island Series of putters. Joining the Antigua and Barbados, introduced early in 2008, are the Abaco, Bimini, and Cayman.

The Abaco was inspired by one of Guerin Rife’s first designs in the late 90’s, the 400 MidMallet that was a no hosel “Anser” style small mallet. Considered to be a player’s mallet the Abaco was out in play at the British Open at Royal Birkdale, according to the company. "On Tour, we do extensive grinding on both the heel and toe and the putter was designed to meet the varying preferences of the tour players for this particular design," said Matt Molloy, President & CEO of Rife Putters.

The Bimini Blade is Rife’s version of the classic 8802 model, considered the truest of blade putters. But it was designed with subtle variations such as a slight raised toe and Rife’s patented RollGroove Face Technology. The Bimini does not have a vertical alignment notch on the back edge of the top line. "We wanted to be certain that this one was designed for the true traditionalist," said Molloy. The Bimini features half milled 304 stainless steel construction.

The final addition to the Island Series is a cavity blade style putter. The new Cayman, is 100% CNC milled from 304 stainless steel and features the company’s RollGroove Technology face producing the truest and quickest “roll” in golf, according to Rife.

The three new additions are available for under $180 each.

OPEN AND SHUT: The National Golf Foundation reported in 2008, U.S. golf course developers posted the lowest number of openings in two decades. Measured in 18-hole equivalents, 72 courses opened in 2008. The economic situation, particularly the continued decline in the housing market, has and will continue to suppress golf course development activity in the U.S., it stated.

There were 106 closures (in 18-hole equivalents) in 2008, according to NGF research. It was the third year in a row with zero to slightly negative net growth in supply (openings and closures canceling each other out). Closures continue to be disproportionately public, stand-alone 9-hole facilities or short courses (executive or par-3 length) with a value price point.

STOCK WATCH: It was another difficult week on Wall Street as Citi revealed it lost $8.29 billion, with a capital B, while Bank of America lost $2.39 billion. Both company revelations are staggering reminders that the sagging economy is aggravating the problems that began with the mortgage crisis in 2007. Meanwhile, Bank of America is resembling more like Bank owned by America as it reached a deal to receive an additional $20 billion in capital from the government. It will also receive guarantees to cover up to $118 billion in losses on loans and securities backed by residential and commercial real estate as it incorporates recently acquired Merrill Lynch & Co. into its operations. Bank of America's deal with the government is similar to one Citigroup reached with the government last fall.

The government also said it will provide $1.5 billion in loans to the financing arm of Chrysler LLC on top of the package of loans the automaker has already received to help buy it time to reorganize.

The major financial indexes headed for the toilet for the second straight week, a result of selling in response to weak economic data released throughout the week and fears that fourth-quarter earnings reports, which begin this week in earnest, will point to a prolonged recession.

The Dow Jones Industrial Average closed down 3.7% from its previous Friday close. The S&P 500 lost of 4.5%, while the Nasdaq was down another 2.7% from the previous week.

TRAVEL:

DO OVER: The Valley of the Sun, otherwise known as Phoenix/Scottsdale, AZ., has long been recognized for its golf amenities. Boasting sunshine in excess of 300 days each and every year, the area has long been a favorite for golf junkies and even those who prefer to play less frequently. Recently, Golf World magazine readers ranked Scottsdale as the fourth best place to play in the world! The area is perhaps, best know for its premium priced offering, especially in the dead of winter when geographical options for play aren’t exactly plentiful.

Recently, Papago Golf Course, a municipal golf course in Phoenix that originally opened in 1963, re-opened for public play in early December after shutting down in April.

The restoration project, the reason for its temporary closure, was a direct result of a partnership between the City of Phoenix, the Arizona Golf Association (AGA), and the Arizona Golf Foundation, a non-profit arm of the AGA. The project is being managed by The Golf Guys, LLC, under the direction of Marvin French, one of the principals at Pumpkin Ridge Golf Club in Oregon. “We are proud and excited to finally unveil the new and improved Papago Golf Course,” said Frank Shipman, President of the Arizona Golf Association Executive Committee. “This has been an exciting project and we are optimistic that Papago will once again be recognized with some of the biggest names in Arizona golf.”

The $5.8 million restoration was under the direction of golf course architect and former Augusta National superintendent William “Billy” Fuller, and included re-turfing of all the greens, tees, fairways and rough; the installation of a new irrigation system; removal of trees to improve sight lines and views; and reshaping and adding of bunkers. Tee boxes have been lengthened at holes 1, 9 and 11, adding nearly 350 yards to the course, which will play anywhere from 5,404 yards to 7,333 yards from four sets of tees.

“This is a special place with a lot of history and character, and I am honored to be a part of this project,” Fuller said. “My goal from day one was to keep this restoration as close to the original design as possible, and I feel like we accomplished that.” The property also expanded the driving range both in width and length, giving Papago the opportunity to host a variety of community sponsored golf programs.

For locals who are intimately familiar with the layout, the course has long, long been a favorite for more than one reason. It represents a stern test of golf as Papago was host of the 1971 U.S. Amateur Public Links Championship, and the neighborhood city course for some of Arizona’s most recognizable junior players, including Billy Mayfair and Heather and Missy Farr. But its also a nice economical alternative to the higher priced options that reside in the Valley of the Sun. Peak rates in the winter months will be $44 (plus $15 for cart) for Phoenix City Cardholder members and $109 (including cart) for those without the Phoenix City Card. Historically, Papago has facilitated more than 80,000 rounds annually. “We had an extremely busy opening weekend, as expected,” said Papago Golf Course General Manager Al Murdock. “We sold out tee times for the first two days pretty quickly, and we expect the tee sheet to stay pretty full.”

The Papago Golf Course sits on the borders of Phoenix, Tempe and Scottsdale, surrounded by the beautiful Papago Buttes and is conveniently located less than a few miles from Phoenix Sky Harbor International Airport making it an attractive, affordable choice for winter visitors.

THE INFORMATION CONTAINED IS BELIEVED TO BE RELIABLE, BUT IT IS NOT GUARANTEED. THE OPINION EXPRESSED IS THAT OF TERRY MCANDREW AND SHOULD NOT BE CONSIDERED A SOLICITATION TO BUY OR SELL SECURITIES IN ANY OF THE COMPANIES DISCUSSED WITHIN THIS NEWSLETTER. CONTENTS OF THIS NEWSLETTER MAY NOT BE REPRINTED OR REBROADCAST WITHOUT THE EXPRESSED WRITTEN CONSENT OF TMAC GOLF

 

Last Updated (Wednesday, 03 February 2010 10:34)

 
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