Nike Case

Objective

Our objective is to analyze Kimi Ford’s analysis of Nike and to determine whether or not her development of her discounted cash flow forecast was accurate in its findings. We also intend to further investigate Cohen’s WACC calculations and their accuracy pertaining to the investment decision faced by Kimi Ford into Nike Inc..

Mission Statement

NorthPoint Group’s:

“Help client’s around the world achieve their long term investment goals through dedication and personal attention to each and every client’s financial goals.”

Nike’s:

“To lead in corporate citizenship through proactive programs that reflect caring for the world family of Nike, our teammates, our consumers, and those who provide services to Nike”(nikebiz.com)

Background

July 5th, 2001, Kimi Ford, a portfolio manager at NorthPoint Group, began to look at Nike, Inc’s write-ups and financial statements.

Nike’s share price had declined significantly from the start of the year.

Her fund, Large-Cap Fund, had performed extremly well recently when compared to the S&P 500.

July 5th, 2001, Kimi Ford, a portfolio manager at NorthPoint Group, began to look at Nike, Inc’s write-ups and financial statements.

Nike’s share price had declined significantly from the start of the year.

Her fund, Large-Cap Fund, had performed extremly well recently when compared to the S&P 500.

Nike’s market share in U.S. athletic shoes had fallen from 48% in 1997 to 42% in 2000.

Recent supply chain issues and the adverse effect of a strong dollar strongly affected revenues negatively.

To boost revenue Nike stated that they would develop more athletic shoe products in the mid-priced segment.

Nike also planned to push its apparel line, which, under the recent leadership of Mindy Grossman, had performed very well.

Nike also mentioned they would exert more effort on expense control.

Company executives reiterated their long-term revenue growth targets of 8-10%, and earnings growth targets of...