FOOL PLATE SPECIAL
An Investment Opinion by MF Templar

Nike Stuffed

Sneaker and sports apparel manufacturer NIKE (NYSE: NKE) plunged $4 5/8 to $54 1/2 after the shares were downgraded by an analyst. Fay Landis of Smith Barney cut her rating on the stock to "neutral" from "attractive" after a visit to the company's production facilities in the Far East. While there, Landis discovered that Nike had apparently cut back its production target for the region by 20%, indicating weakening demand for the company's products. "The bloom may be off the rose," CNBC commentator Joe Kernan paraphrased.

Well off of its 52-week high this morning, the big worry is whether or not Nike will make its $3.44 per share earnings estimate for the next fiscal year. If production targets are really off by 20%, it may be harder than previously thought for Nike to increase earnings by 50% to $0.69 per share in its upcoming fourth quarter, let alone pump up earnings for next year by 21% to $3.44 per share. Nike does currently have $2.70 per share in trailing earnings, suggesting that the current forecast of $2.85 per share might be in the bag, as it only requires an increase of 30% in the next quarter.

With revenues of $8.73 billion, Nike is hardly a stripling in the rough and tumble world of sports apparel. With 297.4 million shares outstanding, the company has a market capitalization of roughly $15.76 billion. With the company holding $267.5 million in cash and $99 million in debt, the enterprise value is $15.93 billion, or 1.79 times trailing sales. Operating margins around 14% put Nike at what would appear to be fair value given the new information. The company trades at 18.5 times the $2.85 per share it will likely earn this fiscal year and is growing long term in the 15% to 20% range. Long-term buyers may want to adopt a wait and see attitude as the company still has quite some time before it reports earnings the week of August 4th.

UPS

Telecommunications equipment company OSICOM (Nasdaq: FIBR) gained $15/16 to $11 after announcing a contract to supply remote access products to MCI (Nasdaq: MCIC), which will integrate them into a network it is building for the U.S. Postal Service.

ALEX. BROWN INC. (NYSE: AB) bolted $10 7/8 higher to $64 after announcing a merger with BANKERS TRUST (NYSE: BT) in deal that was hotly anticipated late last week. Other brokerages and underwriters moving on the news include DONALDSON LUFKIN & JENRETTE (NYSE: DLJ), HAMBRECHT & QUIST (NYSE: HMQ), LEGG MASON (NYSE: LM), PAINE WEBBER GROUP (NYSE: PWJ), LEHMAN BROTHERS (NYSE: LEH), BEAR STEARNS (NYSE: BSC), ADVEST GROUP (NYSE: ADV), RAYMOND JAMES FINANCIAL (NYSE: RJF).

More movers in the investment banking and brokerage world include SALOMON BROTHERS (NYSE: SB), PIPER JAFFRAY (NYSE: PJC), MORGAN KEEGAN (NYSE: MOR), and AG EDWARDS. EVEREN CAPITAL (NYSE: EVN), the former Kemper brokerage unit that holds an investment in private Richmond, Virginia-based Wheat First Butcher Singer, also gained ground, rising $1 7/8 to $23 1/2.

Computer telephony company VOXWARE (Nasdaq: VOXW) rose $1 3/8 to $5 3/8 on announcing a licensing agreement with MICROSOFT (Nasdaq: MSFT), which will use the Voxware's voice compression codecs in its NetShow 2.0 product.

FOAMEX INTERNATIONAL (Nasdaq: FMXI), which makes polyurethane foam for bedding and automotive products, picked up $2 to $14 1/4 after pre-announcing Q1 earnings per share (EPS) of $0.29 to $0.33, within the range of analysts' estimates.

Customer service and transaction processing software company CSG SYSTEMS INTERNATIONAL (Nasdaq: CSGS) surged $1 7/8 to $17 after Alex. Brown raised its rating on the company to "strong buy" from "buy" this morning.

ENCAD INC. (Nasdaq: ENCD) rose $2 11/16 to $32 5/16 after the wide format color printer company said it will report Q1 EPS of $0.31, ahead of the mean estimate of $0.29 and 72% above last year's Q1 results.

Web search engine and organizer EXCITE INC. (Nasdaq: XCIT) moved $2 higher to $11 1/2 on a number of press releases this morning, as well as the prospect of gaining a larger user base through the rumored AMERICA ONLINE (NYSE: AOL) -- COMPUSERVE (Nasdaq: CSRV) merger.

PARKER & PARSLEY PETROLEUM (NYSE: PDP) gained $2 3/8 to $32 1/4 after the oil and gas producer announced a merger with MESA INC. (NYSE: MXP), a former T. Boone Pickens holding that is now under the control of the more low-key Richard Rainwater. The merger will form the third-largest independent oil and gas exploration company in the U.S.

Used-car superstore CIRCUIT CITY CARMAX GROUP (NYSE: KMX) rose $1 7/8 to $16 7/8 after announcing on Friday a 27% increase in Q4 same-store sales and a smaller than expected loss of $0.01 per share.

DQE INC. (NYSE: DQE), parent company of Duquesne Light, gained $2 3/8 to $29 1/2 after agreeing to merge with ALLEGHENY POWER (NYSE: AYP) in a deal valuing DQE at 1.12 shares of Allegheny. The two companies supply electricity in Pennsylvania, West Virginia, and Ohio.

Specialty healthcare company INTEGRATED HEALTH SERVICES (NYSE: IHS) moved up $1 5/8 to $29 3/8 after the company cancelled its plans to combine with infusion therapy provider CORAM HEALTHCARE (NYSE: CRH). Merrill Lynch applauded the announcement with a near-term rating upgrade to "accumulate" from "neutral."

ORGANOGENISIS (AMEX: ORG) gained $2 3/4 to $21 after the company announced marketing approval for its Apligraf Human Skin Equivalent from the Canadian government.

DOWNS

Software development tools company RATIONAL SOFTWARE (Nasdaq: RATL) was taken down $10 to $13 3/8 upon announcing its intention to acquire software development automation company PURE ATRIA SOFTWARE (Nasdaq: PASW), exchanging 0.9 Rational shares for each Pure Atria share.

HEI INC. (Nasdaq: HEII) plunged $3 5/16 to $4 1/2 after the disk drive component maker said its largest customer abruptly cancelled orders to move its production in-house and offshore.

BIOS software company PHOENIX TECHNOLOGIES (Nasdaq: PTEC) slid $3 1/4 to $12 3/8 after the company pre-announced on Friday Q2 EPS of $0.11 to $0.14, down from Q2 results of $0.15 per share last year.

METATOOLS INC. (Nasdaq: MTLS) lost $1 1/8 to $7 after the graphics software company pre-announced Q1 revenues of $6.1 to $6.2 million, down from $8.9 million recorded last quarter. Earnings of break-even to $0.01 per share will miss estimates of $0.06.

Number-two online services provider COMPUSERVE (Nasdaq: CSRV) dropped $1 5/8 to $12 after the Wall Street Journal claimed in this morning's edition that AMERICA ONLINE (NYSE: AOL) is negotiating to acquire the company for $11 to $14 per share. America Online is down $2 7/8 at $45 1/2.

Remote access software company CITRIX SYSTEMS (Nasdaq: CTXS) lost $1 7/16 to $13 1/8 after Computer Reseller News Online said that MICROSOFT (Nasdaq: MSFT) is definitely going ahead with a "Windows Terminal" product to compete in the network computer space.

THIS WEEK'S CONFERENCE CALL SYNOPSES

CUTTER & BUCK (Nasdaq: CBUK) Q3 Conference Call
WILLIAMS-SONOMA (Nasdaq: WSGC) Q4 Conference Call
ST. JOHN KNITS (NYSE: SJK) Q1 Conference Call

FOOL PORTFOLIO STOCKS

FOOL PORTFOLIO               BORING PORTFOLIO
ATCT up $1/8 at $5 7/8       ATLS up $1 1/2 at $27
AOL down $2 3/4 at $45 5/8   BGP up $7/8 at $21 1/2
CHV up $1/4 at $65 1/4       CSL up $3/4 at $29 7/8
COMS up $3/16 at $34 9/16    CSCO up $3 at $53 7/8
GM up $3/8 at $54 3/8        GNT up $1 at $33 7/8
IOM up $1/4 at $17 1/2       ORCL up $1/2 at $39 3/8
KLAC up $2 5/8 at $44 1/8    OXHP up $1 19/32 at $59 19/32
LU unch. at $54 3/8          PMSI down $1/4 at $10 1/8
MMM up $5/8 at $83 7/8       TDW up $5/8 at $45 1/8
T up $1/4 at $34 3/8