Harley is doing something right

[Smoker]

I like the comment at the bottom.


http://www.wgal.com/money/25440962/detail.html

Harley-Davidson has released its latest earnings report.

Despite slumping sales, officials at the motorcycle maker said profits more than tripled in the third quarter, which ended Sept. 26.

Harley officials said the company's net income totaled $88.8 million, compared to $26.5 million in the same period last year.

The company attributes the profits to improvements in its financial services division and efforts to streamline operations at plants, including the one in York County.

Retail sales of new Harleys decreased 7.7 percent worldwide and 9.4 percent in the U.S.

In a company statement, Harley CEO Keith Wandell said, "Despite the continued challenges in the economy, we are making solid, steady progress at transforming our business."

[Rincewind]

They forgot to mention how much money came from taxpayers in the towns where Harley threatened to leave (York and Milwaukee).  Nor is there mention of how many people lost their jobs in the "streamlining" of the factories.  

[PhilBiker]

Could the one-time payment for MV Augusta be buried in those numbers?  I'd think they would want to make that kind of thing very clear.

[cyclopathic]

numbers probably include the wholesale blow out Buell sales.

The reason they choose to liquidate Buell instead selling it to BRP b/c they got more money by blowing inventory 1/2 price.

[Rincewind]

numbers probably include the wholesale blow out Buell sales.

The reason they choose to liquidate Buell instead selling it to BRP b/c they got more money by blowing inventory 1/2 price.

The sale of Buell was also a major tax write-off - but that happened in 2009, not 2010.  The major recent tax change was the write-off of MV Agusta, which they sold for the cost of one cappuccino but which led to major tax benefits.

Profits through losses - yay.

[chornbe]

To be fair, profits through losses is a well-established practice in tough times. They're far from the only ones doing it. It's not too far off from mass layoffs and such.

They also wrote off and chucked a way a lot of bad debt.

They should spin off Eagle Mark completely, and remove in-house financing from the bike game.

[Rincewind]

To be fair, profits through losses is a well-established practice in tough times. They're far from the only ones doing it. It's not too far off from mass layoffs and such.

Agreed.  The article linked says there is a 7-9% drop in sales at the same time as this tripling of income.  So what Harley is doing "right" is playing with figures, writing off losses, and cutting jobs/benefits.... not selling bikes.

[bomber]

To be fair, profits through losses is a well-established practice in tough times. They're far from the only ones doing it. It's not too far off from mass layoffs and such.

They also wrote off and chucked a way a lot of bad debt.

They should spin off Eagle Mark completely, and remove in-house financing from the bike game.

All true -- financial dealings should be left to the experts, like banks . . . . . .

Oh, wait ;-}

[bomber]

Agreed.  The article linked says there is a 7-9% drop in sales at the same time as this tripling of income.  So what Harley is doing "right" is playing with figures, writing off losses, and cutting jobs/benefits.... not selling bikes.

HDI's job, oddly enough, is not to seel bikes -- it is to make money.

They are doing that.

[chornbe]

All true -- financial dealings should be left to the experts, like banks . . . . . .

Oh, wait ;-}

Thank you for your help.

[HipGnosis]

The Subject would be more correct if it was: 'Harley is doing something, right?'

[Biking Sailor]

Forget bikes, how are the T shirt and do-rag sales?  

[county]

Accounting hocus pocus to mollify stockholders...

[Redbandit14]

HDI's job, oddly enough, is not to seel bikes -- it is to make money.

They are doing that.

Yup and that's true of every company anywhere selling anything. Props to you not many people seem to get that even in A capitalist Society

[Biking Sailor]

All in all, you have to admire the management of HD for harnessing the "biker Image" and marketing/licensing it in the market place.  They continued to build motorcycles that fit that bill (post AMF) and grew the brand at an astonishing rate.  They made a lot of monies from non-riders (doctors, lawyers...), and added to their bottom line.  Along the way they kept the quality of the bikes at a pretty high level with a lot of metal instead of cheaping out with plastic, but not their cruisers.  

[falconati]

...and remove in-house financing from the bike game.

Yikes!  I'd have to disagree with you there.  There's a lot of money to be made in financing.  They've got a wide enough price-range for customers that it seems they could be a pretty good lender if they have enough cash/credit.  

[The Shepherd]

They are selling HD guitar picks at the local music store. They don't have to sell more motorcycles to make a profit. They just have to sell more of their logo branded junk to wannabes and fanbois.

[siclmn]

Yes, their profits are made from selling anything with the logo on it. I test rode one today. I said let me ride the biggest smooth riding one you have. He put me on a 96 inch bagger. What a peice of crap it was. Vibration from idle to any rpms, it was horrible. I asked the guy if he would buy a car that ran that rough. He just gave me a blank stare. It handled like an old lady. It leans and then it starts to turn. At every stop it dives 4 inches. He said that is what it's supposed to do. A new bike that runs like an old bike a 1940 old bike. It never changes. After that I had to put 300 miles on my K bike just to get that horrible experience out of my head.

[bassjones]

Yikes!  I'd have to disagree with you there.  There's a lot of money to be made in financing.  They've got a wide enough price-range for customers that it seems they could be a pretty good lender if they have enough cash/credit.  

Not to mention, they sell more bikes this way.  Some of their sales wouldn't happen if the buyer had to get a loan from a bank because that bank might be less willing to make that loan.  They can be a little looser with their credit decisions if need be.  

[chornbe]

I didn't say they should get out of the financing business.
I said spin off Eagle Mark bank. Partially-owned subsidiaries can be a great way to help isolate debt load when things go to shit.
Keeping the financing close at hand is nothing more than contractual binding. No one said it HAS to be 100% in-house.  
HSBC - thieves that they are - and GMAC do most of the "Big Four" financing in the dealerships, and there's no ownership or MFG liability there. You can buy a new Big-Four bike on a signature and a smile.

[chornbe]

PS... a LOT of companies wish they had Harley's client following and loyalty, their diversity and product offerings within their demographic, and wish they had Harley's brand recognition.

Yes... Harley is, in fact, doing something right. Several somethings.

So big deal... some of you don't like Harley bikes. It's just stupid for people to equate their disdain for Harley as some failing in the market space or in a capitalistic society on Harley's part.

I'm not much of a camper, but I sure do recognize Hillary and Coleman brands.
I'm not a heavy equipment operator, but I sure know who Caterpillar and P&H are.
I don't have a pool, but I know who Anthony Pools is.

[rajflyboy]

PS... a LOT of companies wish they had Harley's client following and loyalty, their diversity and product offerings within their demographic, and wish they had Harley's brand recognition.

Yes... Harley is, in fact, doing something right. Several somethings.

So big deal... some of you don't like Harley bikes. It's just stupid for people to equate their disdain for Harley as some failing in the market space or in a capitalistic society on Harley's part.

I'm not much of a camper, but I sure do recognize Hillary and Coleman brands.
I'm not a heavy equipment operator, but I sure know who Caterpillar and P&H are.
I don't have a pool, but I know who Anthony Pools is.

Well

At least I like Moto Guzzi's    

[chornbe]

Well

At least I like Moto Guzzi's    

thank god you're here

[rajflyboy]

Well

I must say that most everything I read says that HD actually made great strides in reliability back in 2007

So..   I guess HD bikes are solid now and reliable as long as you buy a 2007 or newer HOG.

[Paul Barnard]

Yes, their profits are made from selling anything with the logo on it. I test rode one today. I said let me ride the biggest smooth riding one you have. He put me on a 96 inch bagger. What a peice of crap it was. Vibration from idle to any rpms, it was horrible. I asked the guy if he would buy a car that ran that rough. He just gave me a blank stare. It handled like an old lady. It leans and then it starts to turn. At every stop it dives 4 inches. He said that is what it's supposed to do. A new bike that runs like an old bike a 1940 old bike. It never changes. After that I had to put 300 miles on my K bike just to get that horrible experience out of my head.

My experience was markedly different from yours.  It had a low frequency vibration at idle, but smoothed out quite pleasantly at speed.  It cornered surprisingly well for such a heavy bike, and the binders brought it to a stop with aplomb.

[DogBoy]

I didn't say they should get out of the financing business.
I said spin off Eagle Mark bank. Partially-owned subsidiaries can be a great way to help isolate debt load when things go to shit.
Keeping the financing close at hand is nothing more than contractual binding. No one said it HAS to be 100% in-house.  
HSBC - thieves that they are - and GMAC do most of the "Big Four" financing in the dealerships, and there's no ownership or MFG liability there. You can buy a new Big-Four bike on a signature and a smile.

Thats an over simplification on the Big 4 financing. I believe there is some shared interest. The Japanese OEM distributors instruct HSBC on what they are willing to accept for credit history/score and those standards can change during the year, although certain things (like bankruptcy) will knock you out no matter what.


I agree with falconati. In house financing is lucrative and I'm sure the Japanese US distributors would offer it they could.

And once again to correct the HD licensing fallacy, I don't believe they ever made even 10% of revenue from licensing/merchandise. Any other manufacturer would kill to have that extra revenue stream.

[chornbe]

Well

I must say that most everything I read says that HD actually made great strides in reliability back in 2007

So..   I guess HD bikes are solid now and reliable as long as you buy a 2007 or newer HOG.

yeah, those other million or so bikes out on the road suck.

[Powder Addict]

Well

I must say that most everything I read says that HD actually made great strides in reliability back in 2007

So..   I guess HD bikes are solid now and reliable as long as you buy a 2007 or newer HOG.

How do you know they're reliable?  They're only 3 years old, and 95% have less than 5k on them.

[Paul Barnard]

How do you know they're reliable?  They're only 3 years old, and 95% have less than 5k on them.

Is that so?  Why is it that on my 7150 mile trip out west last year Harley comprised some 80% of the bikes I saw on the road, and most of those had plates from another state?  People ride the hell out of Harley touring bikes.  You should probably allow that the bias you have has distorted your view of reality.  Doubt me?  Pull a random sampling of used Harleys off of Bike Trader and see what the average mileage is on used ones.

[TuffguyF4i]

yeah, those other million or so bikes out on the road suck.

...and the rest made it home.  

zing!!

[Powder Addict]

...and the rest made it home.  

zing!!

 

[Skee]

Agreed.  The article linked says there is a 7-9% drop in sales at the same time as this tripling of income.  So what Harley is doing "right" is playing with figures, writing off losses, and cutting jobs/benefits.... not selling bikes.

Finally a post with a smidgen of intelligent discussion and you guys have to revert to pie throwing.  & you can judge me by the company I keep.

Actually, I think HD is making sales progress.  There's not much they can do here in the US.  When you own 80% of the market, you only get a 10% gain if you eat 50% of your competition.  Where I see progress is in Europe.  It used to be, for me at least, seeing a Harley in Eurpoe was rare.  Maybe that's because I don't go to Europe a lot.  Now it's like on every trip, I see more and more HDs.  It appears (to me) to be a status ride over there.  Folks I talk to are not riding it because it's a great performance machine - you can tour on almost anything - the folks I talk to are riding them because they say they are fun to ride (and I suspect, because it says they can afford to ride them.  They ain't cheap to wun  in the EU.  

If that's the case, Harley is building a new client base.  And that's good for sales in the long run.  Maybe what you really want to own is HD stock?

[Windblown]

"Figures lie and liars figure."

When it comes to corporate profits they all spin figures to say what they want. It works for a few years, yet eventually it comes out in the wash.  Is Harley ok? Probably.  Is much of their or any other corporations earnings reports a bunch of fancy paper shuffling when times are tough? Of course.

[Skee]

"Figures lie and liars figure."

When it comes to corporate profits they all spin figures to say what they want. It works for a few years, yet eventually it comes out in the wash.  Is Harley ok? Probably.  Is much of their or any other corporations earnings reports a bunch of fancy paper shuffling when times are tough? Of course.

Obviously a Wharton graduate...

[bassjones]

as much fun as it is to bash HD on here, and I'll admit I enjoy it   I see more HDs on the road when I'm riding than anything else.  A couple of weeks ago I took a long ride (for me) and rough guesstimating I would say 90% of the bikes I saw on the road (not counting those I saw at the bars  ) were Harleys.  A couple of sport bikes, one BMW ST two-up, a couple of other ST bikes and the rest were Japanese cruisers.  A lot of those guys put a lot of miles on.  Sure there are the posers out there, just like there are lots of SQUIDs on sportbikes who put maybe 1000 miles a year on, mostly riding around town wearing shorts, tennis shoes, a t-shirt and here in Indiana no helmet.  Not everyone wants or needs state of the art handling or 100 plus horsepower to enjoy riding.  Harley makes good motorcycles and they've cornered the market for their type of machine.  Will I ever own one? Probably not, because I find the riding position intolerable and I enjoy the superior handling of sportier bikes.  Even if I went to a cruiser I'd probably go with a Japanese brand because I'm a cheap bastard and not all that interested in the image thing...

[RodeRash]

Interesting that HD still made money.  Last year, Yamaha, as a corporation, lost about two billion dollars.
Yamaha is the only one of the Japanese four who does not also build cars lawn mowers or industrial products.

When the world wide economy goes to hell, people quit buying toys first.   Yamaha and Harley are in the same boat.
They have no mainstream product lines to fall back on.   Pianos don't sell in this economy either.
Makes you wonder how an exclusive manufacturer like S&S Cycles keeps alive.

[STJoe]

"Figures lie and liars figure."

There are liars, damn liars, and statisticians.  

I would say 90% of the bikes I saw on the road (not counting those I saw at the bars  Lol) were Harleys.

Sad, but true.  

[chornbe]

Why is that sad?  

I'll never understand the hatred and the seemingly "cool" anti-Harley sentiment.

Gosh... other people like them. Why is that a crime?

I really, seriously don't get it.

[rajflyboy]

Chris

Do you work at a Harley Dealership????

[Mr. Clean]

I live in Milwaukee, where 95% of the bikes are HD.  It is not Harley that I bash, it is the chrome polishing, asshats that put 2k miles on their bikes a year.  The whole riding my bike to the corner bar has always made me wonder WTF. I like Harley, I just feel I get better bang for my buck in the foreign market.   Harley is also doing well since they jammed a new contract down the worker's throats here in Milwaukee.  Any new employee at HD in Milwaukee makes half of what someone hired just a few years ago.  A two tiered work force makes for the company pushing out employess who make more, and letting the lower wage employees get away with anything.  I think I got off track, so anyways I bash the "typical" HD rider, not HD itself.  When you are on some back road in the middle of Utah, and see a HD, that person riding it gets it.  

[Skee]

Why is that sad?  

I'll never understand the hatred and the seemingly "cool" anti-Harley sentiment.

Gosh... other people like them. Why is that a crime?

I really, seriously don't get it.

So how many times have you pulled up in a parking lot at a bar (yes, I like  bar food) or somewhere and had a pirate ask "Why don't you ride a real motorcycle?"  It's hardly a grudge on my part, and certainly far from hatred.  C'mon, bashing is just for fun.  Seriously, I'd buy their stock before I'd buy one of their bikes, but if my one leg was shorter than the other, I'd ride one too.  

[Galo]

CNBC had a very interesting stat out today: of all companies already reporting earnings for their last fiscal quarter (July 1st thru September 30th for most of those companies) fully 81% had reported earnings higher than analyst's estimates -beat forecasts, if you will.  Revenue is another matter altogether.....less than 20% had beat on the revenue side.

Simply put, earnings > forecasts are coming from increased productivity, efficiency and lower payrolls (COS). Unemployment at 9.6% be damned.....companies are still making LOTS of money....

[Baz]

CNBC had a very interesting stat out today: of all companies already reporting earnings for their last fiscal quarter (July 1st thru September 30th for most of those companies) fully 81% had reported earnings higher than analyst's estimates -beat forecasts, if you will.  Revenue is another matter altogether.....less than 20% had beat on the revenue side.

Simply put, earnings > forecasts are coming from increased productivity, efficiency and lower payrolls (COS). Unemployment at 9.6% be damned.....companies are still making LOTS of money....

Unfortunately in all cases, unless you have increased sales activity, things do start to look bad to shareholders.

The general consensus at Wall street is that everyone has cut to the bone, and unless you start to see growth through increased sales, you will hit a brick wall. You can only cut so deep. Most companies are not reporting any great near term insights.

The wall street analysts are all saying now that unless we start to see big improvements in the Job market, the market will not bode well in the next while. Not in North America at least.

GM for instance reported great sales in the last quarter, but if you dig deep the money folks all find that if you remove the lost leader sales (brands they have discontinued, and sold at reduced prices) and included the fact they had to throw in larger discounts than every other car company to get things off the lot, their real sales picture does not look as rosy as reported.

I suspect the last Harley quarter had a lot of similar accounting magic placed into it as someone has already suggested.

With a reported combined 20% unemployment or under employment rate, I would not look for any bright spots in the next couple of years for anyone making toys.

[bassjones]

... Harley is also doing well since they jammed a new contract down the worker's throats here in Milwaukee.  Any new employee at HD in Milwaukee makes half of what someone hired just a few years ago.  A two tiered work force makes for the company pushing out employess who make more, and letting the lower wage employees get away with anything....  

GM just did the same thing.  My company (a GE supplier for flight and engine controls) just did the same thing.  "Multi-skilled" used to be the highest paid job title in the plant because they could do any job there.  Now, EVERYBODY is multi-skilled but gets paid less than half of a former "Multi-skilled" job classification.  Cheap labor is abundant overseas and to be competitive the American worker has had to accept less money than they were making 10 years ago.  Even Union jobs (Harley, GM, my company, etc...) don't pay as much any more.

[Biking Sailor]

I would not look for any bright spots in the next couple of years for anyone making toys.

So, is the answer for the American motorcycle market to evolve to be more like Europe and Asia, where motorcycles are not as much toys, as they are cost effective means of transportation?