Harley-Davidson (NYSE:HOG) announced its third quarter earnings this morning, and they reflected the slack in demand the company warned us about last month. For the quarter, net income fell to $265 million from $312.7 million in the same quarter of 2006, and diluted EPS was $1.07, compared to $1.20 in 2006. Analysts surveyed by Thomson Financial had expected earnings of $1.05

U.S. sales fell by 2.5%, but international sales, up 8.8%, helped keep the drop in overall world sales to only 0.2%. For the year, the company now expects to ship 332,000 bikes, down 4% from 2006. EPS is also expected to finish 4-6% behind 2006 totals of $3.93, quite a swing from the 4-% growth the company projected in its 2nd quarter report.

Harley-Davidson Financial Services revenue fell, as might be expected, in step with the decline in sales, lagging 10.4% from a year earlier.

One bright note in the report is that, while the company's sales for the first nine months of 2007 were off 4.7%, the overall sales of heavyweight motorcycles, the class in which most of H-D's bike fall, was off 4.4%. This suggests that the company is not losing market share to its competition.

For more perspective, read Sheldon Liber's take on H-D.