Updated from 9:23 a.m. EDT

Harley-Davidson's

(HDI)

earnings machine hit a bump in the road after two decades of record earnings.

The motorcycle icon Wednesday lowered 2005 guidance, saying U.S. sales have been "relatively flat" during the first quarter.

Shares were recently down $10.12, or 17.2%, to $48.65. The stock was downgraded Wednesday morning at Merrill Lynch and RBC Capital Markets.

The Milwaukee-based company said 2005 earnings are expected to grow by approximately 5% to 8% compared with its previous forecast of midteens earnings growth. Shipments are now seen at 329,000 instead of 339,000. Analysts expect the company to earn $3.36 a share on revenue of $5.43 billion.

Nevertheless, Harley put its best foot forward. "We see no reason to change our long-term unit growth projection of 7% to 9% annually based on just three winter months of sales data," the company said. "Similarly, we are not changing our projection of midteens earnings growth other than for this year."

On the positive side, the company reported record earnings and revenue for the first quarter. Net income was $227.2 million, or 77 cents a share, up 13.2% from the year-ago quarter's $204.6 million, or 68 cents a share. Revenue rose to $1.24 billion from $1.17 billion. The consensus forecast was 76 cents a share, according to Thomson First Call.

Retail motorcycle sales fell 1% for the year and 0.4% for the first quarter. Worldwide sales grew 2.8% for the quarter, driven by strong performances in Europe and Japan, partly because of the weak dollar.