With its private clubs, expensive fees, and tee-box business deals, golf has historically been a game for select members of society. If you're like me, golf probably conjures up images of old men in bright clothes, or doctors spending their free time out on the course. It certainly wasn't a game I enjoyed as a kid.
However, that all began to change when a certain Tiger pounced on the scene. Over the last several years, golf has been attracting a much larger and more diverse fan base. All of a sudden, it's cool for kids to be out there playing.
One would probably think that's great news for a company like Callaway Golf (NYSE:ELY). As it turns out, however, that may not necessarily be the case. Callaway is now forced to compete in a market that has been inundated with a plethora of low-priced alternatives and imitators. It's also brought companies like Nike (NYSE:NKE), which can more easily appeal to a younger crowd, into the game.
Over the past couple years, Callaway has been conducting a massive reorganization as it tries to regain market share from lower-priced competitors and overhaul its marketing plans to attract more customers.
It's already showing signs of improvement over its dreadful showing in 2004. For the fourth quarter of 2005, the company reported a loss of $0.27 per share. Yes, it's still a loss, but it's better than analysts were expecting and a marked improvement over the $0.42 per share it lost in the year-ago period. Sales also improved in the quarter, climbing 7% to $154.5 million.
For the year, Callaway posted a profit of $0.19 per share -- a big improvement over the $0.45 per share loss of 2004. Sales were also up 7% for the full year to $998.1 million.
However, while Callaway seems to be on the right track, it hasn't proven that it's entirely back in the game. I don't think anything's going to happen quickly, so there should be plenty of time to see if it can continue to improve its results. Until then, Callaway still seems like the old guys in ridiculous clothes complaining about the kids playing on their course.
Fool contributor Mike Cianciolo welcomes feedback and doesn't own shares of any of the companies in this article.
