UPDATE 2-Callaway Golf CEO resigns; co to cut jobs

Wed Jun 29, 2011 6:06pm EDT

* CEO George Fellows resigns

* Anthony Thornley named interim CEO

* Sees weak Q2 results

* Shares down 8 pct after the bell (Adds forecast in paragraph 1, background in paragraph 4-5, outlook numbers)

BANGALORE, June 29 (Reuters) - Callaway Golf Co forecast weak second-quarter results and said it will cut jobs, as it seeks to turn profitable, even as it announced the resignation of Chief Executive George Fellows for personal reasons.

The golf gear maker, which has reported losses in the past two years and has lagged peers in recovering from the recession, named board member Anthony Thornley as its interim leader.

"While it is clear that it was the global economic recession that derailed our record sales and earnings pace, it is also clear that our business is not keeping pace with the industry recovery," said Thornley -- described by the company as an avid golfer with a low single-digit handicap.

Pre-tax charges associated with the organizational changes, including severance expenses, are estimated at about $20 million for 2011, including $8 million in the second quarter.

Callaway did not specify how many jobs it would cut.

The company expects annual cost savings of about $50 million from the changes.

Callaway, known for its Big Bertha range of clubs and balls, has been losing market share to rivals such as Adidas' (ADSGn.DE) TaylorMade over the past few months.

In April, the company temporarily suspended its 2011 outlook as it found it tough to estimate the impact of the earthquake in Japan -- its second-largest market.

Carlsbad, California-based Callaway expects a second-quarter net loss of about $55 million on revenue of about $270 million.

Analysts, on average, were expecting a profit of 22 cents a share, before special items, on revenue of $308.2 million, according to Thomson Reuters I/B/E/S.

The outlook includes charges of a valuation allowance of about $46 million related to its U.S. deferred tax assets.

Shares of the company were down 8 percent after the bell at $5.84. They had closed at $6.33 on Wednesday on the New York Stock Exchange. (Reporting by Mihir Dalal in Bangalore; Editing by Joyjeet Das)