Nike, Cost of Capital

Nike Inc.: Cost of Capital

Case #14

BUS 5200 Dr. Zong

By

Bryan Cooley, Esther Ferris, Jaime Lomeli and Aamir Syed

Company Overview

Nike Inc., founded in 1962, has evolved from an importer of Japanese shoes as a U.S. footwear distributor to a global marketer of athletic footwear, apparel and equipment that is unrivaled in the world.

Nike has a powerful brand Portfolio with many solely owned subsidiaries that include Cole Haan, Converse Inc, Hurley International LLC, Nike Golf, and Umbro Ltd.

Nike’s world headquarters is a 76 acre campus located near Beaverton, Oregon, a suburb west of Portland. Today Nike operates in more than 160 countries around the world and employs more than one million people.

Nike’s mission statement is “to bring inspiration and innovation to every athlete in the world, if you have a body, you are an athlete.”

For the fiscal year 2001, Nike reported revenues of $9,488.8 billion. For the fiscal year 2009, they reported revenues of $19.2 billion, a 3% increase over 2008 year’s earnings.

History Timeline

1962 – Phil Knight, a Standard University business student formed Blue Ribbon Sports (BRS) to import Japanese running shoes.

1964 – Knight and William Bowerman form partnership for $500 dollars each and a hand shake.

1966 – First BRS outlet opens and Knight and Bowerman make formal written partnership on April 26.

1967 – Knight and Bowerman incorporate BRS, Inc.

1970 – Bowerman’s experimentation with his wife’s waffle iron results in the creation of a sole that changes the design of footwear forever.

1971 – The “swoosh” trademark is designed by student Carolyn Davidson for $35.

1971 – Jeff Johnson, Nike’s first employee dreams of the Greek Goddess of victory, Nike and Nike adapts the name over Knight’s suggestion for the shoe of “Division 6.”

1972 – Nike enters its first foreign market, Canada, at the 1972 U.S. Olympic Trials.

1978 – BRS officially changes its name to Nike, Inc., May 30. Nike’s first children’s shoes are...