Counterfeit Golf Clubs - - Callaway Golf Stock

Apparently not a lot is being done to halt the counterfeiting practice and as for punishment, you be the judge.

Steve Pike is a Golf Equipment Examiner . . . a golf writer who goes beyond the 18th hole to cover more than just the game. Here are two of his latest blogs for EXAMINER.COM

The Busness Of Golf Club Knockoffs

The U.S. Golf Manufacturers Anti-Counterfeiting Working Group comprised of Acushnet Company (Titleist, FootJoy, Cobra), Callaway Golf, Cleveland/Srixon Golf, Nike Golf, PING and TaylorMade Golf Company reports that the Shanghai Changning District Court has convicted two principal violators (Shi-Feng and Shi-Chun-Ping) for selling counterfeit golf products. These convictions were the culmination of an enforcement action conducted after complaints were filed by the group with China's  Public Security Bureau.

Many counterfeit golf clubs are sold, at very low prices, at shopping centers in Beijing, Shanghai and Hong Kong.

The court determined that the defendants were guilty of an "attempted crime" based on the evidence that the inventory of counterfeit golf products was not ultimately sold only because their operation was raided. In addition, the court acknowledged that the defendants confessed, and expressed remorse for their actions. For these reasons, the court mitigated the punishment according to Chinese criminal law.

An official ceremony recently took in Shanghai whereby the counterfeit products seized in the raids were destroyed by the PSB. The Chinese court had valued the counterfeit golf equipment seized by the PSB at more than $880,000. A bulldozer crushed the illegal goods into useless scrap


What's The Scoop On Callaway Golf Stock

It appears the only one who benefited from Callaway Golf Company's (NYSE: ELY) private stock offering was the company. ELY's shareholders certainly haven't reaped any rewards. Callaway stock closed July 2 at $4.89 per share after trading at a 52-week low of $4.87.

Callaway last month completed a private offering of $140 million of 7.50 percent series b cumulative perpetual convertible preferred stock and used the net proceeds - about $134 million - to pay down a portion of its revolving line of credit. That's the good news. The bad news - along with its plunging stock price - is that the company continues to struggle with sales in its core metal woods business and Q3 and Q4 are historically slow sales and earnings periods.

Callaway also continues to heavily push special sales, such as a promotion whereby a customer buys a set of FT-ibrids or FT irons, he or she will receive a free FT-IQ driver. That's good for the consumer, if he or she wants to go that route, but makes one question the sales succes and future of the FT-IQ driver, which Callaway began shipping just this past November.

Back to the stock price. When current Callaway Golf Chief Executive Officer George Fellows came on board Aug. 1, 2005, the company's traded that day as high as $15 per share and closed at $14.93. To be fair, the golf equipment landscape has changed for the worse in the past four years, but that stock price decline during Fellows' tenure still should raise some eyebrows.

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Steve Pike is an award-winning journalist who defined golf business reporting in the early 1990s as the first Golf Business Editor for Golfweek magazine and later at Golf World and Golf Shop Operations magazines. His blogs for the EXAMINER.COM may be found here from time to time.