Nike Announces Plans For $1 Billion Stock Buyback

Nike earned $141 million, or 40 cents a share, in its second quarter, down from $176.9 million, or 60 cents a share, for the same quarter last year.

Revenues for the quarter ended Nov. 30 were $2.26 billion, up 7 percent from $2.11 billion last year.

The company predicted a slowdown in revenue growth for the second half.

Despite the revenue growth, earnings were down because of lower gross margins from close-out sales in the United States, Europe and Asia.

Nike also announced that its board of directors approved a four-year, $1 billion share repurchase program.

“Since our initial public offering in 1980, our solid track record of growth has generated excellent returns for shareholders.

“Our prospects for continued growth are abundant and clearly defined,” chairman and CEO Philip Knight said.

“We believe that our strong cash flow will enable us to continue to invest in these opportunities while also enhancing shareholder value through share repurchase.”

Nike said futures orders for athletic footwear and apparel scheduled for delivery between December 1997 and April 1998 total $4.2 billion, 1 percent lower than for the same period last year.

Had the U.S. dollar remained constant at year-ago levels, worldwide futures orders would have increased 1 percent, Nike said.

By region, futures orders were down 10 percent in the United States, up 23 percent in Europe, down 3 percent in Asia and up 27 percent in the Americas.

“This slowdown in futures orders clearly signals that revenue growth in the second half of fiscal 1998 will be below our previous expectations,” Knight said.

Some of the stocks that moved substantially or traded heavily Friday:

NYSE

Showboat rose 8-7/16 to 29-3/8.

Harrah’s Entertainment is buying the rival casino operator for $519 million in a deal that the companies said would create the world’s biggest gambling company. Harrah’s would get control of an additional four casinos, giving it a total of 20 casinos in 15 markets.

Continental Homes rose 4-3/16 to 39-11/16.

D.R. Horton agreed to buy the homebuilder. Continental, based in Scottsdale, Ariz., hired Smith Barney in October to review potential deals.

AT&T rose 2-3/16 to 61-15/16.

The long-distance giant is freezing hiring and halting its effort to expand into local telephone service in an aggressive drive to cut costs and buoy the company’s stock price. The moves come barely two months after AT&T hired a new chairman, turn-around artist C. Michael Armstrong.

NASDAQ

Microsoft fell 2-5/16 to 128-9/16.

A federal judge said he will consider the Justice Department’s contempt-of-court case against the Redmond, Wash.-based software maker. In a hearing today the judge indicted the company may have trouble making its case that it should be allowed to continue requiring computer sellers to buy its Internet browser along with its Windows 95 software.

Dell Computer fell 2-7/16 to 78-5/16.

Computer stocks, including Dell and NYSE-listed IBM, Compaq and Digital Equipment Corp., all lost ground after Japan’s main stock index sank 5 percent. Analysts fear persistent trouble in the Asian economy will slow sales industrywide.

DepoTech fell 8-7/8 to 4-1/4.

The Food and Drug Administration rejected the company’s DepoCyt anti-cancer agent. The company is based in Emeryville, Calif.

Software Artistry rose 6-1/2 to 24-1/4.

IBM agreed to buy the Indianapolis software maker for about $169 million in cash. The company makes software that helps companies integrate their customer-support systems.