Public Skateboard Companies? – Glancing at skateboarding’s stock exchange.

There seems to be a general predisposition among skateboard-industry critics and supporters that Activision, a public company on the New York Stock Exchange (NYSE)-through its insanely popular Tony Hawk Pro Skater video game launched in 1999-successfully introduced skateboarding to the masses.

Surely sales managers at skateboard companies across the board can attest to the revenue-generating blessings that came with skateboarding’s astronomical growth in popularity in the late 90s, and Activision gets a lot of credit for this.

Since then, Activision (NASDAQ: ATVI) teamed up with the game’s namesake to release four more video games, with the latest title, Tony Hawk Underground (THUG) scheduled for release in October 2003.

In the apparel world, last year according to Hoover’s Online (hoover.com)-an investors’ information Web site-Australian surf-and skate-apparel manufacturer Billabong (AUX: BBG) reported annual sales of 281.3-million U.S. dollars for the fiscal year ending in June 2002. The glowing figure indicated a one-year sales growth of a whopping 42.5 percent, as 2001 annual sales figures were 197.4-million U.S. dollars. Although company stock hit a pretty low period in March of this year, its value has been climbing steadily since then. On August 5, 2003, Billabong International Limited released a stock-exchange announcement addressing the as-of-yet unaudited results for the 2002/03 fiscal year. The annoucement states, “Billabong announces that the current expectation for the 2002/03 profit after tax, including the benefit of changes under the tax consolidation regime, will be in the order of 76-million dollars, representing an increase of approximately 24 percent on the prior year result (61-million dollars).” The message did clarify that after tax the underlying profit will be “in excess of 73-million dollars, representing an increase of approximately 21 percent on the prior year result.” A disclaimer at the end of the announcement stated that figures presented in the message are still subject to audit, and the report for the fiscal year ending in June 2003 will be released on August 25, 2003 according to the Billabong corporate Web site (billabongcorporate.com).

A final point mentioned in the message stated the outlook for the 2003/04 fiscal year for after-tax profit growth is fifteen percent-a bit lower than what the company’s growth has been over the past few years. As markets are constantly changing, the figures may change.

In July of 2003, online news source yahoo.com reported in its finance section: “Surf-, skate- and snowwear retailer Billabong dropped 2.4 percent to AUS $6.51, after a competitor, U.S. street footwear group Vans Inc. posted a wider-than-expected quarterly loss.”

The same article quotes Symone Fynmore, a private client adviser, saying, “It is really sentiment issues, and until we see the Australian companies report, we are going to be driven by the U.S. market.”

Stockholders in mega skate-sneaker manufacturer and marketing company Vans, Inc. (NASDAQ:VANS) might have faced a tiny scare around the same time last year when company stock prices dropped down to below seven dollars. A huge change from May 2001 when the company sold 3,220,000 common shares at $23.15 each, according to Standard & Poors (standardandpoors.com), an online credit and investment information source. The site reports that in the first quarter of the 2003 fiscal year, Vans repurchased 400,000 shares of common stock, adding that the company cited concerns in September of 2002 over things such as “underperforming (Vans) skateparks, and weakness in the overall footwear and retail markets.” Fortunately for both Vans and its stockholders, stock values have been slowly climbing back up over the past year, and at the time of press, were close to nine dollars ($8.90 on Sunday August 3, 2003).

Large-scale safety gear and skateboard manufacturer Variflex, Inc. (NASDAQ:VFLX) reported its results for the fourth quarter d year end in July 2002 with a net profit of 1,164,000 dollars, or 25 cents per diluted share on revenues of over 16.27-million dollars, compared to a net income of 53,000 dollars or one cent per diluted share on revenues of over 12.8-million dollars for the same three-month period in 2001. In October, 2002 Variflex’s Chairman Mark S. Siegel stated in a company press release, “We are encouraged by the financial result in the third and fourth quarters, in which we returned to profitability by increasing revenues and gross margins.

“We believe our continued commitment to develop our infrastructure during the downturn provided improvements in both our product development and marketing,” added Siegel, reaffirming both shareholders and the industry that the company continues to maintain a strong balance sheet, “with over 28.4-million dollars in working capital, over 31-million dollars in shareholder equity and minimal long-term debt.” At the time of press, company stock value was at 5.861.

Siegel does get points for optimism. In the same press release from October 2002, Siegel didn’t fail to acknowledge the U.S. recession that was sinking in and a war that wasn’t likely far off. “We are encouraged by the recent financial results that have been attained, especially in light of the continuing difficult economic environment,” said Siegel.

With the economic boom of the late 90s, skateboarding’s industry grew by the thousand-fold. Skateboarding, with its plethora of big-time pros and company owners, has its share of millionaires, too. That economic boom of the 90s brought on board tens of major corporations seeking to get a piece of skateboarding.According to IASC statistics, there are 32-million skateboarders in the world-obviously not all of them full-time or ‘core skateboarders, but that’s a huge number, regardless. Of this number, IASC figures stated that half of them-a whopping sixteen-million are in the U.S., and of that figure, eight-million are in California-basically one-fourth of the world’s skateboarders. So with the appeal of skateboarders and the market they comprise being clearly and obviously profitable, corporate America felt compelled to hop on board.

The 90s saw companies such as Dean Foods Co. (NYSE: DF) sign a two-year deal between its subsidiary Hershey’s Milk and Tony Hawk, who also signed a deal with Bagel Bites, owned by H.J. Heinz Company (NYSE: HNZ), and Apple Computers (NASDAQ: AAPL). Hawk stars in one of the Apple’s Switch campaign ads. Girl’s Eric Koston also added Apple to his roster of sponsors.

Clothing company Quiksilver, Inc. (NYSE: ZQK) is another public company that signed with Hawk, along with Reese Forbes, Tim O’Connor, Donny Barley, among others. And that’s not the company’s only involvement in skateboarding. The company also owns Seattle, Washington-based Mervyn Manufacturing, the company that brings us Lib Tech skateboards, best known for its unconventional composite-based skateboards.

Public Skateboard Companies?

In a recent discussion, SKATE Biz staff quickly counted 25 public companies in skateboarding. For the purpose of this article, any company that sponsors skateboarders has been considered a skateboard company. This definition would eliminate Dean Foods (Hershey’s Milk), Heinz (Bagel Bites), Mattel (Tyco), Nestle, Boost Mobile, AOL Time Warner (TransWorld Media), and Primedia (Skateboarder mag), from the list of skateboard companies, as the former ones have simply hired a skateboarder(s) to endorse their products, or the latter two are skateboard magazines that happen to be owned by media conglomerates. However, it doesn’t eliminate Payless Shoe Source (NYSE), as they sponsor Andy Macdonald-through them he has a pro shoe. It also includes Ford, which sponsors Omar Hassan. And then you have Apple Computers, Nike, Luxottica group (Arnette sunglasses), and Globe (Globe, Gallaz, Kubic Marketing, Dwindle Distribuiton). There’s also Oakley, PacSun, and K2 (Planet Earth, Hawk Shoes, and Adio).

Media Conglomerates

Perhaps the most infamous corporate presence in skateboarding is that of ESPN, Inc., an 80-percent-owned subsidiary of ABC, Inc, which is owned by the infamous Disney corporation (NYSE: DIS). Sure, the relationship between Disney and ESPN is a bit of a stretch-two degrees of separation-but it’s there nonetheless. Sort of like how TransWorld SKATEboarding is owned by TransWorld Media which is a subsidiary of AOL Time Warner. For that matter, Los Angeles-based Skateboarder magazine is owned by Primedia, which is also on the New York Stock Exchange (NYSE: PRIM).

Broker View

The notion of investing in skateboarding’s successful public companies versus less-successful ones that-albeit sporadically-suffer from lagging stock prices, can be confusing. Debating the merits of the aforementioned notion, a stockbroker for a major Manhattan firm wishing to remain anonymous, stated a simple approach to considering a worthwhile investment: “A good company helps a good stock price-but a good company doesn’t necessarily always offer good stocks.”Skateboarders, for the most part, have been fighting a war with corporate America since the beginning. You could easily argue that skateboarders have had an inherent disposition to oppose corporate America, and for the most part, rightfully so. Ocean Howell has made the point that because skateboarding subverted corporate America, corporate America turned around and repressed skateboarding.

Perhaps things today are different. Sure, stock values of public skateboard companies might be less than a couple of years ago when the economy was booming. Sure, skateboarding still hosts a wealth, literally, of public companies that are a part of that mass entity known as corporate America. And fortunately for their shareholders, skateboarders are still very marketable.

So through a single degree of separation-you, I, us, and them-skateboarders are a part of corporate America, too. k Shoes, and Adio).

Media Conglomerates

Perhaps the most infamous corporate presence in skateboarding is that of ESPN, Inc., an 80-percent-owned subsidiary of ABC, Inc, which is owned by the infamous Disney corporation (NYSE: DIS). Sure, the relationship between Disney and ESPN is a bit of a stretch-two degrees of separation-but it’s there nonetheless. Sort of like how TransWorld SKATEboarding is owned by TransWorld Media which is a subsidiary of AOL Time Warner. For that matter, Los Angeles-based Skateboarder magazine is owned by Primedia, which is also on the New York Stock Exchange (NYSE: PRIM).

Broker View

The notion of investing in skateboarding’s successful public companies versus less-successful ones that-albeit sporadically-suffer from lagging stock prices, can be confusing. Debating the merits of the aforementioned notion, a stockbroker for a major Manhattan firm wishing to remain anonymous, stated a simple approach to considering a worthwhile investment: “A good company helps a good stock price-but a good company doesn’t necessarily always offer good stocks.”Skateboarders, for the most part, have been fighting a war with corporate America since the beginning. You could easily argue that skateboarders have had an inherent disposition to oppose corporate America, and for the most part, rightfully so. Ocean Howell has made the point that because skateboarding subverted corporate America, corporate America turned around and repressed skateboarding.

Perhaps things today are different. Sure, stock values of public skateboard companies might be less than a couple of years ago when the economy was booming. Sure, skateboarding still hosts a wealth, literally, of public companies that are a part of that mass entity known as corporate America. And fortunately for their shareholders, skateboarders are still very marketable.

So through a single degree of separation-you, I, us, and them-skateboarders are a part of corporate America, too.