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Run-up to Nike Earnings

NIKE (NKE)

THE sportings good apparel company. Sells shoes, clothes, lifestyle and then some.

Reports Q1 earnings Tuesday 3/19 at approx. 415p. Conference call at 5p.

Nike
Nike

WHAT WILL MOVE THE STOCK:

OVERSEAS BIZ - Nike's international business is more important than ever, especially in light of concerns about U.S. economic health.

... ESPECIALLY ASIA - Keep an eye on China: it's a growing customer of Nike's goods, especially leading up to the Olympics in Beijing this summer. But the analyst at Caris is concerned that sales there may be leveling off. China is also a major manufacturing location for Nike. Will surging inflation there and in Vietnam impact Nike production costs?

HOW'S THE U.S. DOING? - Earlier this month, Adidas' CEO said the North American sporting good industry will "remain difficult" for the next six to nine months and start to improve in 2009. Is Nike as pessimistic as Adidas?

THE THREAT FROM UNDER ARMOUR - Under Armour's much-hyped cross trainer will hit stores on May 3rd. Nike's offering debuted last Friday, a month earlier than expected. The Nike cross trainer is also $10 cheaper than expected. Why is Nike competing on price before Under Armour shoes is even out? Nike's ad campaign for the cross trainer is also being well received, says CNBC Sports Business Reporter Darren Rovell. Early release, low price, big ad campaign: is Nike playing a smart, aggressive game or has it gone too far with the price cut? Does the move make Nike look desperate?

ESTIMATES:

Q3 Estimates: EPS up 18% to $0.81, revenues up 11% to $4.355 billion

Q4 Estimates: EPS up 13% to $0.97, revenues up 11% to $4.847 billion

FY 08 Estimates: EPS up 22% to $3.57, revenues up 12% to $18.204 billion

Source: Thomson Financial

Year-ago actuals: Q3 EPS $0.69, Revenues $3.927 bln

*All estimates are current as of 3/19 and subject to change.*

Factoids:

CITI LIKES NIKE - On Mar. 12, Citigroup confirmed its buy rating on Nike and said a pullback in the stock had created a buying opportunity. Since then Nike shares are up about 8%. If Nike finishes above $62.51, it will be the highest close since early January.

... BUT CARIS IS LESS ENTHUSIASTIC - On Monday, the analyst at Caris said the upside for Nike is limited. Caris cut its rating to "above average" from "buy" and trimmed its price target to $65 from $70. Caris still likes Nike, but sees rough times for the next few quarters due to weakening U.S. economic conditions and tough comparisons to year-ago results.

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