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Friday, December 18, 1998
"A successful man is one who can lay a firm foundation with the bricks that others throw at him." -- Sidney Greenberg
NBA Locks Out Nike
With such distractions as football, college basketball, Clinton's impending impeachment, and air strikes on Iraq, no one else may have noticed (or cared) about the NBA lockout. But one company is hurting from the impasse between team owners and players: Nike Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NKE)") else Response.Write("(NYSE: NKE)") end if %>. The sneaker giant late yesterday reported a 50% drop in fiscal second quarter earnings, to $0.24 from $0.48 a share, and a 15% decline in revenues to $1.91 billion. But the results were good enough to surpass analysts' First Call mean EPS estimate by $0.02.
The world's largest athletic shoe maker said it managed to meet its own earnings expectations as cost-cutting efforts began to kick in. Nike cut inventory by 17% from the same time last year. Still, worldwide orders slated for delivery between December and April total $3.8 billion -- 10% lower than the same period a year ago. Orders are down 7% in the U.S., 37% in Asia and 29% in Nike's "Americas" region, but are up 5% in Europe (down 1% in constant dollar terms). In its home market, which also happens to be its largest, Nike remains "cautious" due to weakness in athletic apparel and continuing uncertainty surrounding the NBA season.
In the second quarter, the Beaverton, Oregon-based company saw global footwear sales drop 23% and global apparel sales fall 5%. In the U.S., declines were 15% and 13%, respectively. In Asia, revenues sank 46% (38% in constant dollar terms) with a 53% slump in Japan, while revenues slid 16% (9% in constant dollar terms) in the Americas region. A bright spot for Nike was Europe, where revenues grew 9% (a mere 1% in constant dollar terms) and where the company remains "bullish." The company isn't changing guidance for earnings for the rest of the fiscal year, even though it's becoming more and more likely that no NBA games will be played this season.
For more on Nike, see our September 16 Dueling Fools.
News to Go
The world's largest automaker, General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %>, announced it will pay 52.5 billion yen ($456 million) to increase its 37.5% stake in Isuzu Motors to 49%. Isuzu will design GM trucks ranging from two to seven tons for production at Isuzu and GM factories worldwide, and the two automakers will reduce costs by sharing truck cabs, chassis and other components.
It looks like FDX Corp.'s <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDX)") else Response.Write("(NYSE: FDX)") end if %> Federal Express has reached a tentative contract agreement with the pilots' union. If approved by the union's 3,300 members, the collective bargaining contract would be the first of its kind at FedEx, where the pilots -- who, according to the company, make $142,000 a year on average -- are the only unionized workers.
Home furnishings retailer Bed Bath & Beyond <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BBBY)") else Response.Write("(Nasdaq: BBBY)") end if %> reported fiscal third quarter earnings of $0.17 a share, up from $0.13 last year and in line with analysts' expectations. Same-store sales for the quarter increased 8.8% year over year.
Restaurant chain operator Shoney's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SHN)") else Response.Write("(NYSE: SHN)") end if %> announced a fiscal Q4 loss of $0.18 a share, compared with a loss of $0.74 in the same year-earlier period. Revenues dropped 10% to $245.8 million as comparable store sales fell 3.5% due in part to a 2.9% increase in menu prices.
The nation's biggest utility holding company Duke Energy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DUK)") else Response.Write("(NYSE: DUK)") end if %> said it has agreed to buy BHP Power from Melbourne, Australia-based Broken Hill Proprietary Co. for $315 million, increasing its presence Down Under.
Electronic communications products maker Brooktrout <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BRKT)") else Response.Write("(Nasdaq: BRKT)") end if %> said it will acquire Lucent Technologies' <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> computer telephony products business for $29.4 million in cash. Brooktrout anticipates the purchase will reduce Q4 EPS by roughly $0.63 to $0.75 per share.
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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor
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