Nike shares fall on weak future orders, outlook

Investors sent shares of Nike Inc. lower Thursday after the footwear maker reported its fourth-quarter profit fell 30 percent on costs to cut jobs.

The Beaverton, Ore.-based company's results beat Wall Street expectations, but the company said orders for the next several months are down significantly compared with last year.

After Nike reported its results late Wednesday, management said it was optimistic about the company's long-term prospects for recovery, but gave a modest outlook for the near term.

Susquehanna Financial Group downgraded Nike to "Neutral" from "Positive," saying the cost savings Nike put in place were not enough to offset the weaker orders and the impact of foreign exchange rates.

Susquehanna analyst Tom Haggerty said while the company is willing to invest in its business, there are no drivers for near-term growth and the current weak retail environment could continue to pressure the company's operating performance.

Haggerty also reduced his per-share earnings estimate for 2010 to $3.28 from $3.65, given expected sales drops and gross margin reductions.

While said that the company remains the premier global athletic brand, shares are likely to remain in their current range until Nike sees a significant improvement in its growth prospects.

Jim Duffy at Thomas Weisel Partners, who has an "Overweight" rating of Nike shares, remained more optimistic, saying he remains impressed with Nike's performance relative to its peers.

"Nike offers a unique combination of balance sheet strength, free cash flow, and growth prospects," he wrote in a note to investors.

Duffy reiterated his 2010 earnings estimate of $3.73 per share.

Shares of Nike fell $1.77, or 3.3 percent, to $51.25 in afternoon trading.