I have never played poker with Harley-Davidson Inc. chief executive officer Keith Wandell. But if I did, and he went "all in" with his chips on a crucial hand, I'd look him in the eyes. And then I'd probably fold.

Wandell is "all in" with Harley. The stakes are high, and he's playing his hand accordingly.
As they say, drastic times call for drastic measures. Harley's core customers - people willing to plop down $40,000 or so for a new motorcycle - have been steadily dwindling. And even if they are willing to fork over that kind of coin, good luck obtaining the financing.

Harley's earnings have fallen for nine consecutive quarters.

Wandell, who built a track record of squeezing efficiencies out of operations in his years as an executive at Johnson Controls Inc., was brought in last year to do the nasty, painful hatcheting at Harley.

So far, he's been up to the task.

Wandell is laying off thousands of people and closing plants. He recently ended the Buell Motorcycle line.

Wandell is divesting Harley's MV Agusta venture in Varese, Italy.

He's threatening to close Harley's plant in York, Pa., unless the company receives the right concessions from the employees there and the right incentives from the local governments there. That decision will come in December.

With all of that chaos and all of that carnage, you might think Wall Street would be skeptical about Milwaukee Iron. You would be wrong.

Stock analyst Craig Kennison of Robert W. Baird & Co. Inc., is downright bullish on Harley, raising his outlook for the company to "outperform." Kennison is predicting a "cyclical rebound and turnaround story" for Harley.

"We expect shipments to bottom in 2009 following efforts to slash dealer inventory. Meanwhile, we see a dynamic turnaround story led by a bold CEO driving better performance. We see an opportunity to earn $2.25-$2.50 per share at modest production levels as Harley exits unprofitable brands, renegotiates York, and expands internationally. At 11-12x that expectation, we consider Harley the best value in our recreation space," Kennison wrote.

"Operations meet expectations. Harley reported a noisy quarter, reminiscent of bar-time at a Harley rally. Beyond the noise, however, key operating metrics met our expectations … Focus on post-restructuring earnings power. We see the potential to earn $2.25-$2.50 per share on a modest improvement in shipments (250K bikes) as the restructuring plan unfolds. New CEO Keith Wandell is taking bold action to refocus the business and build around the Harley-Davidson brand," Kennison stated.

Kennison is predicting that much of Harley's new growth will come from overseas, as the company plans to add 100 to 150 international dealers to drive shipments to 40 percent of bikes sold by 2014.

So, Wandell's legacy at the Harley helm awaits him. He could go down as a cruel butcher who cut the life out of one of America's proudest brands. Or he could follow in the footsteps of predecessor Richard Teerlink as a corporate savior and a turnaround genius who pulled Harley out of the scrap heap.

Either way, it will be a painful, bumpy ride.

 

Steve Jagler is executive editor of BizTimes Milwaukee.