Death notice, takeover rumors


InfoBeat - Golf equipment pioneer dies of cancer

(AP) - Ely Callaway, who turned Callaway Golf Co. into the
biggest clubmaker in the world with his ``Big Bertha'' drivers
and a passion to make golf enjoyable for the masses, died early
Thursday of pancreatic cancer. He was 82.

Callaway died at 2:30 a.m. PDT at his home in Rancho Santa Fe,
Calif., spokesman Larry Dorman said.

``He went peacefully, with his family around him,'' Dorman said.
``There will be a huge void felt in the world of golf.''

Doctors discovered a tumor on Callaway's pancreas two months ago
during surgery to remove his gall bladder. He resigned as
president and chief executive officer May 15, and was succeeded
by Ron Drapeau.

``We will all continue to honor his memory by doing our very best
on behalf of the company that he created,'' Drapeau said.

Arnold Palmer, who signed a 12-year endorsement deal with
Callaway and backed the controversial ERC driver, said the
oversized drivers that Callaway pioneered were ``one of the most
important things that ever happened in the game.''

``The fact is, 90 percent of all golfers are struggling to play
the game,'' Palmer said from his office in Latrobe, Pa. ``His
whole idea was to give them an opportunity to enjoy the game a
little more. That was the thing that hit me the hardest about
Ely.''

Annika Sorenstam, who has been on Callaway's professional staff
throughout her career, cried when a company official called her
Thursday morning at the LPGA event in Ohio.

``I felt like he was my grandfather,'' Sorenstam said. ``That's
the kind of relationship we had. He was there from the beginning
of my career.''

After spending nearly 30 years in the textile industry, Callaway
paid $400,000 in 1984 for a small golf company called Hickory
Stick, which made specialty clubs with hickory wrapped around
steel shafts.

Callaway turned it into so much more.

From the oversized Big Bertha to the controversial ERC driver, he
was at the forefront of some of the biggest technological
advancements in equipment over the past decade. Sales that were a
modest $5 million in 1988 soared to $800 million 10 years later.

``You can't fool the public,'' Callaway said in a 1998 interview
with The Associated Press. ``If they are going to buy your
product it has to be better. It has to be right. It has to be
truly more satisfying than the existing product.''

The Big Bertha, named after a World War I cannon, paved the way
for drivers that had a bigger sweet spot and were easier to hit.
The ERC, which violated U.S. Golf Association standards for how
quickly a ball could spring from the face of the club, led to a
debate whether recreational players should fall under the same
standards as pros.

In the middle of it all was Callaway, a visionary with a
high-pitched twang who could be charming and combative.

``His energy level was very high, and his intensity in making
things happen was unprecedented,'' Palmer said. ``Certainly, the
golf industry knows that.''

Callaway never boasted that his clubs caused the ball to go
farther or straighter, only that they were more forgiving and
made the game more enjoyable for the average player.

``We've sold $5 billion in golf clubs since Callaway started from
nothing, which is far more than anybody in the world has ever
done,'' he said in January. ``And we want to keep on making clubs
that are going to make people happier.''

Callaway could be feisty and accommodating, a small man with big
designs who had a devilish grin and a twinkle in his blue eyes
that belied his willingness to take on any battle, even as an
octogenarian.

Callaway introduced the ERC driver - the initials stand for Ely
Reeves Callaway - in 1999, at first selling it only in Asia and
Europe. The Royal & Ancient Golf Club, which governs the game
everywhere but the United States and Mexico, did not declare it
nonconforming.

It was a mystery club in America, and sold for as much as $1,000.

A year later, Callaway thumbed his nose at the USGA by
introducing the ERC II and selling it in America. He further
shocked the establishment by introducing Palmer, the most
endearing figure in golf, as his primary pitchman for the club.

``Obviously, we had a difference of opinion on spring-like
effect,'' said USGA spokesman Marty Parkes. ``But a lot of people
here had a lot of respect for him and what he did for the game.
Go out today on any golf course and look in peoples' bag. His
equipment is used by an awful lot of people.''

Callaway lobbied for different rules for competitive and
recreational golf, and was delighted when the R&A said last year
it found nothing wrong with the ERC and that extra distance alone
was not a threat to the game.

Because of the rift, players can use the ERC driver in the
British Open or the Ryder Cup, but not at any tournament played
in the United States.

Callaway was born June 3, 1919, in LaGrange, Ga., the son of a
textile executive and a distant cousin of Bobby Jones.

He graduated from Emory University in 1940 and enlisted in the
U.S. Army, serving until the conclusion of World War II. Callaway
became one of the Army's top procurement officers, which led to a
successful career in the textile industry, first with Milliken
Textiles and later as president of Burlington.

He left Burlington in 1973 after a dispute over who should be
chairman, and turned his attention to a small vineyard he had
planted in southern California. Just like everything else in his
career, it proved highly profitable.

Callaway developed his own label and sold it in 1981 for $14
million, then turned his attention to golf clubs.

``There was no grand vision of three careers and big fortunes,''
he told the Los Angeles Times in 1995. ``I just started out one
little step at a time and hoped it worked. Luck was a big piece
of it - not so much good luck, but the absence of bad luck.''

The biggest break was playing golf after selling his vineyard
and stumbling across a wedge made by Hickory Stick.

Callaway bought the company because he felt it made a superior
product, the creed for his reign in the golf equipment business.

Big Bertha was launched in 1991, and net sales increased by at
least $100 million each year from 1992 until a downturn in the
equipment industry in 1998.

``I knew the first time I ever played with the refined prototype
of the first Big Bertha driver that it would be a huge seller,
and would continue to be until somebody came along and made a
better one,'' he once said.

Callaway introduced oversized irons in 1994, added Odyssey
putters to its stable and invested $170 million in a golf ball
plant last year.

The name of the company's ball is ``Rule 35,'' a play on the
USGA's 34 rules of golf.

The additional rule: Have fun.

``In a business based on pleasure, we have developed a product
which changed the game for the good,'' he once said.

Callaway is survived by his wife, Lucinda Villa; a sister, Lula
Callaway Albright; three children, Reeves, Lisa and Nicholas; and
four grandchildren.

Funeral arrangements were not immediately available.




InfoBeat - Callaway subject of takeover rumors
By BEN FOX
Associated Press Writer

SAN DIEGO (AP) - Shares of Callaway Golf Co. rose nearly 8
percent Thursday on rumors the world's largest club maker could be
a takeover target following the death of founder Ely Callaway.
``This is what they call a ghoul play,'' said analyst Bud Leedom
at brokerage Wells Fargo Van Kasper. ``When a central figure in a
company passes away, people start speculating there's a takeover on
the way.''
Ely Callaway, who died at his home north of San Diego at age 82,
was considered a visionary in the golf industry who was closely
associated with the management of the company that bears his name.
The stock symbol is ``ELY.''
After nearly 30 years in the textile industry, Callaway paid
$400,000 in 1982 for a small company called Hickory Stick, which
made specialty clubs with hickory wrapped around steel shafts.
He transformed it into a company that was at the forefront of
some of the biggest technological advancements in equipment over
the past decade. Callaway produced the oversized Big Bertha and the
controversial ERC driver, which violated U.S. Golf Association
standards for how quickly a ball could spring from the face of the
club, among other products.
Callaway retired as president and chief executive officer in
May, which is when the rumors of a sale began to circulate, said
analyst Alexander Paris of Barrington Research. ``It's kind of the
morbid side of Wall Street,'' he said.
On Thursday, Callaway shares rose high as $17.51 before falling
back a bit to $17, up 75 cents, in afternoon trading on the New
York Stock Exchange.
Callaway spokesman Larry Dorman said the company doesn't comment
on rumors and is continuing business as usual, preparing to release
new products that he declined to specify. Ron Drapeau took over as
president and chief executive officer in May.
The company, with sales of $828 million last year and no
long-term debt, has a strong international brand recognition,
making it an attractive target for a company seeking to enter the
highly competitive golf equipment industry, analysts said.
``It's got one of the best recognized names in golf,'' Paris
said.
Callaway's leading competitors - Fortune Brands, Karsten
Manufacturing and Taylor Made - are unlikely buyers since they
already make clubs, according to analysts who speculated that a
luxury goods company or sports apparel firm might be interested.
Others said there may be nothing to the rumors.
Nike Inc. was consider the most likely candidate in the past,
but the shoe company is already launching its own line of clubs and
has probably lost interest, said Hayley Kissel of Merrill Lynch.
Kissel said that part of Callaway's legacy is a strong
management team that can continue operating the firm as an
independent player, at least for the time being.
``I don't think that with Ely out of the picture you can
conclude the company is up for sale,'' she said.

Mike
www.mikekellerphoto.com