I bought shares at $13.80. Let's see what happens.
The San Diego Union-Tribune (California)
Distributed by Knight/Ridder Tribune News Service
July 28, 2006 Friday
SECTION: BUSINESS AND FINANCIAL NEWS
ACC-NO: 20060728-SD-GOLF-SHARES-20060728
LENGTH: 523 words
HEADLINE: Aldila bogeys in 2nd quarter; shares fall 45 percent
BYLINE: Jennifer Davies, The San Diego Union-Tribune
BODY:
Jul. 28--Shares of Aldila, a Poway golf shaft maker, plunged more than 45
percent yesterday, a day after it reported lackluster sales and blamed a weak
golf market for the slowdown.
Investors punished the company after it reported Wednesday that its profits
had declined 25 percent and that revenue had fallen 20 percent from a year ago.
Shares fell $11.80 to close at $13.92.
The company also attributed its second-quarter performance to waning interest
in its top-selling shaft, the NV. Aldila supplies golf equipment makers, such as
Callaway and TaylorMade, with branded and nonbranded shafts.
Aldila said its shaft sales decreased 21 percent from the previous quarter
and the average selling price fell 9 percent.
The company said its net income decreased to $2.7 million, or 47 cents a
share, from $3.6 million, or 66 cents a share, from the same quarter a year ago
and revenue dropped to $17.4 million from $21.8 million.
"NV shaft sales appear to have peaked, and their sales are likely to decline
over time as new products enter the marketplace," Peter R. Mathewson, Aldila's
chairman and chief executive, said in a conference call Wednesday.
Executives at Aldila did not return repeated calls for comment yesterday.
Casey Alexander, an analyst with Gilford Securities, said Aldila has long
been the hot brand, but that was changing with more competitors gaining market
share.
"They have been the shafts du jour. All of a sudden, they're not," he said.
"When you are no longer the shaft du jour, you have no idea when you are
going to come up with the next hot product."
Aldila said that its next line of shafts, the VS Proto, will help make up for
declines in its NV sales. But it cautioned that the higher price of the new
models might make them a harder sell with consumers.
Bud Leedom, publisher of the California Stock Report, said that Aldila might
have reached saturation with its branded shafts, which have become popular in
the last couple of years.
"A lot of people on Wall Street think that this company is a one-trick pony,"
he said.
Also, the company was hurt by the flat golf equipment market, Leedom said,
pointing out that Callaway Golf's second-quarter earnings disappointed analysts.
After missing Wall Street targets with its earnings report Wednesday, Callaway
saw its shares fall $1.01, or 8 percent, yesterday to close at $10.50.
Alexander didn't buy Aldila's contention that its earnings were a reflection
of the overall golf market. While the golf business has struggled in recent
years, the company's shares had performed well, trading around the $30 mark just
last month, he said.
"The golf market has been having a hard time for several years now but Aldila
has been having a spanking good time," he said. |
