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[rasmusmi]

This was in Barry Carraway's monthly newsletter from Phoenix, AZ based Cyclerides.com (http://www.cyclerides.com/), and I thought it was worth sharing:

"The economy has had an affect on a lot of things and the beloved Harley-Davidson is no exception. What once was a streamlined money making machine with 20 years of consecutive quarterly increases, profits at the motor company have fallen on hard times tumbling 58% for the fourth quarter due to weaker demand for its motorcycles.
 
If you read the headlines, you might think HD was going to ride off into the sunset and never be heard from again. Here are a few of my favorites, "HOG Slaughtered: Harley-Davidson profit falls 58%", "Harley-Davidson running on fumes", "HOG hits pothole", "HD sees rough road ahead". Ok, you get the picture, financial writers were having a little fun at the expense of the motor company. So are they putting the last nail in the coffin a little early? That is yet to be seen, but here is what all the fuss is about.
 
Harley reported a 58% decline in net income for the fourth quarter and announced plant closures that would result in 1100 workers losing their jobs. Harley plans to consolidate two engine and transmission plants in Milwaukee into a Wisconsin facility. It will reduce its paint and frame operations at the York, PA plant and close a distribution facility in Franklin. They also plan to cut shipments between 10% and 13% in 2009. Throw in the fact that Harley stock is down over 70% in the last year to as low as $10 per share, based on these headlines, this is starting to look like a company that is going out of business.
 
Not so fast. Sometimes it is a good idea to read beyond the bullet points and headlines. What you didn't see in bold print is that HD still had revenues for the quarter of $1.29 billion compared to $1.39 billion a year ago, a 6.8% decrease on lower sales of bikes. Net income was $77.8 million down from $108.3 million from last year. For the full year, revenue was $5.59 billion, a 2.3% decline and net income was $654.7 million down 25% from $933.8 million. Wholesale shipments of Harley-Davidson motorcycles were 303,479 units, an 8.2% decrease compared to 330,619 units in 2007. In the U.S., retail sales of new Harley-Davidson motorcycles decreased 19.6% compared to the same period in 2007 and overall, the U.S. 651-plus CC motorcycle market decreased 25.5% shipping 76,581 bikes in the fourth quarter.
 
Now you know the numbers, here are some 4th Quarter Harley-Davidson FUN FACTS:
-In the motorcycle family shipment mix touring was 34.2% compared to 35.9% of the shipment mix in 2007.
-Custom, representing soft tails, Dyna, and VRSC motorcycles was 46.5% compared to 43.0% in 2007 and Sportster motorcycles were 19.3% of the total shipment mix.
-Revenue from parts and accessories was $152 million or a decrease of 7.9% from the year ago quarter.
-General merchandise revenue was $69 million, a decrease of 6.0% or $4.4 million.
-The firm plans to ship between 264,000 and 273,000 Harley-Davidson motorcycles in 2009, which represents a 10% to 13% reduction versus last year.
 
Does this sound like a company that is going out of business? Must not be that bad. Billionaire financier Warren Buffett just stepped up with a loan of $300 million. Even if revenue dropped by 20% next year they would still do $4.4 billion dollars. As a Harley owner, I'm not worried about them going out of business, I'm worried about something that could be particularly troubling to the brand. HOG is currently selling at $13 per share with a dividend of $1.32 per share yielding over %10 to the shareholder, has a PE of 4.7 and over $500 million in cash with a market cap of $2.8 billion. When HOG was trading at $50 per share, the market cap was over $11 billion. For $5 billion, someone could come in there and buy the company at a bargain. Sound like a lot? I'm guessing the chairman of General Electric has that much in his top right desk drawer for an acquisition like this.
 
My point is this. Is Harley-Davidson going to have to tighten their belt and adjust costs like everyone else? They sure are. But the fact still remains that they are a 105 year old worldwide brand name that has their logo on everything from toilet paper to motorcycles that is going to be around for a long time. I remember the days of AMF and hope that the next 100 years remains with the same management philosophy geared toward riding that will protect the brand and the image."

[planenut]

well said,they've been through alot and there not going anywere     

[SilverDawg]

This is why I keep buying stock.  Cost averaging is helping me justify buying more.  As with many industries, the tight credit market is hurting sales.  It will come back, perhaps never as strong as it was, but it will rebound. I intend to make some $$ from a company that has taken a fair amount of my coin.  Their brand is way too strong.  Perhaps a dose of humility for the MoCo will focus them on what their core business...building quality (well, except for the 110 engine ) bikes.