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Callaway appoint George Fellows as CEO

Callaway Golf Company (NYSE: ELY) ended its search for a new president and chief executive officer Aug. 1 with the appointment of George Fellows to those positions.

Fellows, who has had a consulting business in New York since 2000, serving as a senior advisor to Investcorp and JPMorgan Partners, replaces Bill Baker, who served as interim CEO and chairman since August of 2004 following the ouster of Ron Drapeau by the equipment giant's board of directors.

Baker will remain as a director of Callaway Golf but will be replaced as chairman by Ronald Beard, the company's lead independent director.

"The Board has worked very hard to coordinate its search for a new CEO with its ongoing review of strategic opportunities, and that hard work has paid off by bringing to us a terrific leader in George Fellows," Beard said.

"Mr. Fellows is a skilled operator who has a track record of building shareholder value in numerous consumer brand businesses. In particular, his expertise in marketing and brand building is expected to help us continue to build strength in all of the company's four major golf brands -- Callaway Golf, Odyssey, Top-Flite and Ben Hogan.

“Mr. Fellows has shown the ability to motivate employees, understand customers and consumers, and build strong supply chain relationships -- all of which have contributed to a well deserved reputation as someone who can build shareholder value inside a company," he added. "We feel that he is the ideal candidate to work with the board, the existing management team and our employees to accomplish our goals going forward."

Wall Street offered a mixed opinion on the news of Fellows' becoming Callaway Golf's new boss. Callaway stock was selling as high as $15 per share in early morning trading after opening at $14.97, but ended the day down a bit at $14.93 on a volume of approximately 422,000 shares.

Fellows takes the reins at Callaway at a time when the Carlsbad, Calif.-based company is coming off a strong second quarter in earnings and sales. Callaway last month reported second quarter earnings of $18.4 million on sales of $323.1 million, each figure an increase over the comparable period in 2004.

For the first six months of 2005, however, Callaway's earnings dipped to $36.8 million versus $54.3 million the same period in '04 on sales of $623 million compared to sales of $661.7 million in the first six months of '04.

Besides taking over a company that is looking to regain its once-dominant position in the metal woods market, Fellows also comes in at a time when Callaway Golf is being eyed as a potential takeover target. Reports surfaced earlier this summer that the private equity firm Thomas H. Lee Partners and insurance magnate William Foley had made a $1.2 billion play for Callaway Golf, which led to speculation that the company would be sold and taken private.

Whether Fellows' appointment fuels more speculation or puts an end to it remains to be seen. Callaway Chief Financial Officer Brad Holiday, in a July 21 conference call, told Wall Street analysts that "no substantive discussion" was currently underway in regard to possibly selling Callaway Golf.


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