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Harley stock takes a joy ride
Shares of the motorcycle maker zoom higher as earnings roar past estimates.
Posted by TheStreet Staff on Tuesday, July 20, 2010 11:21 AM
Updated at 4:30 p.m. ET

By TheStreet

Shares of Harley-Davidson (HOG) zoomed higher after the motorcycle maker roared past earnings estimates Tuesday.

The Milwaukee icon posted second-quarter earnings of 59 cents a share, 18 cents more than what analysts were expecting.

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Shares were up 13.6% to $26.83.

Harley had revenue of $1.135 billion versus the $1.1128 billion forecast. Harley saw a big turnaround in its financial services division, where it posted operating income of $61 million compared with a $91 million loss there a year ago. Gross margin came in at 35% compared to 34.1% in the year-ago period.

Harley had been steadily gathering earnings upgrades in the past month. Its shares had been on a precipitous decline since April, when they topped out at $36 this year. Harley also had been rumored as a takeover target.

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"We are pleased with the continued moderation in the rate of decline of retail new Harley-Davidson motorcycle sales again in the second quarter," said Keith Wandell, president and chief executive officer of Harley-Davidson. "At the same time, we continue to believe conditions will remain challenging this year for new motorcycle purchases and we will manage the business based on that expectation, with a continued strong focus on managing supply in line with demand.

"Despite the decline in second-quarter retail motorcycle sales, we believe interest in the Harley-Davidson brand remains strong among riders of all generations. We are seeing the benefits of our restructuring and continuous improvement activities reflected in our earnings performance.

Harley shipped 112,720 motorcycles in the first half of 2010, a 15.2% decrease compared with last year's 132,849. Revenue from motorcycles through six months was $1.64 billion, a 9.8% decrease.

The company expects to ship 201,000 to 212,000 motorcycles to dealers and distributors this year, a drop of 5% to 10% from 2009.
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