Rommel Dionisio who covers Harley Davidson at Wunderlich Securities talks about Harley Davidson's troubles, and why the stock could continue to suffer. Bobbi Rebell reports.
Harley-Davidson having a rough ride today shares down sharply after the company cut its profit outlook and announced it will be cutting jobs. Probably in these CO covers the company at wonder let's securities and joins us with more great to have you. Thank you so much are so what is going on at Harley that had a bad year altogether back. Yeah they really have it all started about a year ago when the Japanese currency. Early changed so dramatically pursue US dollar and the primary competitors are obvious which that's Honda Yamaha Kawasaki Suzuki on manufacturing and weeks. Every week of bikes. In Japan so that should now have a significant cost to actually start off promoting discounting heavily. That eat into its market share and now most recently they're great the Japanese are aggressively launching new products around the world. That's further eating it to him on his team it's its market share all of whom. They're vice once again from around the produced here in the states. So the plan now is to cut jobs put that money marketing a product development is that the rates strategy. We'll look. Term there really need to try to figure out the answer to spend as much. It's certainly investing. Increasing investment decisions myself. And my visas and all the right stuff tastes he could to take some time that this could be a multi year practice just try to regain its market share. They've been up to the Japanese you just in the last few months. And of course Wall Street not I was so patient they Lampard corner so in terms of the stock took a huge hit today on this news what's your take there. Well I think ultimately. Even as the continued disappointment that of the new products which they launch for next here are just not resonating with consumers feel. Did unveiled several new products in August for the 2016 model year. And that the initial read just doesn't seem to be on a positive in terms of their ability to stem market share decline. And at the same time the Japanese continue to be very aggressive not just with discounts but also with new product launches. So what's your recommendation on the stock we had this level and it is it is it a good value out at a car down so much ultimately even with facilities. Filled with the. This system silence. Enough for the launching sponsors. No big wait until next. Yes of course played totally lost its track against future. Put some time to cut prices increased promotions increased advertising all of which are steps that will likely take. But those are more and it's his post round exit system. And in fact they did talk about the fact that operating margins have been under pressure they they are also facing some big picture things that are not really in control of the truth as the world is changing. Demographic trends are not in their favor. There's a list of the United States. One of the key issues that Harley faces and really the entire motorcycle industry faces in the United States. Is he aging demographic colonials. People who twenties and thirties to start riding motorcycles the way to these 50s60s girls. Used to a new enactments and there is that it really capturing the younger demographic. But having said that of long term this tremendous opportunity emerging markets we have many writers write novels. Come through and that's. So perhaps you know type decades of a process to grow that market place. Long term story over Harley-Davidson thank you so much. I think she Obama Viennese seal of wonder of the securities and bother about that's as writers.