HDI - Greenberg
Harley-Davidson Stalls in the Fast Lane
By Herb Greenberg
11/05/2001 07:29
You won't get me to disagree with anybody who says Harley-Davidson HDI is a great brand, or that it has a history of being a great manufacturer and, that among no-growth manufacturers, it is the growth exception.
But even the growth at the greatest of growth companies eventually can slow, and that appears to be what is now happening at Harley. And it's happening as the economy isn't getting better -- not good news for luxury items like motorcycles. The slowdown is starting to show up in the quality of Harley's quarterly earnings.
Last quarter, for example, accounts receivable were up 9.6%, while sales, sequentially, were flat. The company also books a noncash gain -- something it doesn't even disclose -- from the sale of a securitized portfolio of customer loans. That gain, in recent quarters, was enough to spell the difference between the company beating and not beating analyst estimates.
There are other signs of trouble, as well, such as the 4.9% financing Harley has been offering its best customers. Why offer discounts if business is so good? The answer is you don't!
And don't give me the line that 16 million shares short is 16 million shares that will have to be bought because the bear story has gone away. There also could be 16 million shares that will have to be bought at lower prices if the bear story turns out to be right.
And that's likely to be just what happens, even if the company stops doing what the bears don't like, especially if earnings growth stalls. Even Harley's stock would sputter on that news. |
