SWOT ANALYSIS
Callaway Golf designs, manufactures and sells a variety of golf clubs, golf balls and
golfing accessories. It is the market leader in the US retail golf market but faces
intense competition and the challenges of a mature market. In September 2004
Callaway suspended previously announced quarterly and annual earnings guidance
in an effort to fully review its business.
Strengths
Market leadership
Callaway has been a leader in the US retail golf market for the last seven years. In
2003, it continued to lead the woods market in both units sold (18% share) and
revenues (24% share). In the irons market, it had 17.2% share of units sold and
26.1% share of revenues. Callaway's Odyssey brand led the putter category with 42%
share of units and 49.4% share of overall revenues. With the formation of its Top-Flite
subsidiary, Callaway is now the number two player in golf balls worldwide.
Wide range of offerings
The company offers a wide range of products that encompass all price segments. It
has products for the professional as well as the amateur golfer. Its drivers, fairway
woods, irons and putters compete in all price segments and are available in a variety
of styles and specifications to suit the preferences and skill levels of all golfers. This
means major market penetration.
Strong cash flow and no debt
The company's strong cash position and lack of debt is an important and valuable
competitive advantage that gives it the flexibility to evaluate acquisition and
investment opportunities. In 2003, it used approximately $154 million of cash (no debt
financing) to acquire Top-Flite Golf Company. In this year, it generated $119 million in
cash flow fr ...