Stocks fall with warning from Nike Shoemaker's profits fail to meet projections; Dow off 27 points to 7,330

THE BALTIMORE SUN

NEW YORK -- U.S. stocks fell yesterday as shares of Nike Inc., the world's largest maker of sports shoes and apparel, tumbled after warning that profits won't live up to forecasts.

"We're paying very close attention to the earnings," said Guy Truicko, a money manager at Unity Management Inc., which oversees $1 billion and sold a $15 million position in Nike last month. "Any smell of disappointment and we're out."

The Dow Jones industrial average dropped 27.05 to 7,330.18; the Standard & Poor's 500 index fell 3.13 to 844.08; and the Nasdaq composite index declined 7.14 to 1,403.04.

The Russell 2,000 index of small capitalization stocks rose for an eighth day in a row, gaining 0.64 to a record 378.43. The Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq exchanges, slid 12.08 to 8,000.97; the American Stock Exchange composite index climbed 2.33 to 603.12, half a point shy of a record; and the S&P; mid-cap index shed .21 to 277.05.

Nike said a surprise delay in orders by European retailers would result in disappointing earnings for the fiscal fourth quarter ending today.

Profit will be between 51 cents and 56 cents a share, the company said, less than the 71 cents analysts expected. Nike shares fell 8.625 -- 13 percent -- to $55.375. On Wednesday, Nike shares rose $3.875 on speculation that Berkshire Hathaway Inc.'s Warren Buffett was acquiring shares.

Rival shoemakers declined after Nike's warning. Reebok International Ltd. fell 50 cents to $39.75; Fila International SpA's American depositary receipts slid 87.5 cents to $42.25; and Converse Inc. dropped $1 to $20.25.

Kimberly-Clark was another stock that Truicko's Unity abandoned in recent weeks. That sale proved timely as Kimberly-Clark dropped $2.125 to $50 yesterday. Two Wall Street analysts downgraded its shares, warning that earnings may be weak because of competition and slow shipments of commercial paper products.

IBM fell $2.375 to $87.75, leading the Dow industrials lower, after Salomon Brothers Inc. analyst John B. Jones Jr. reduced his investment opinion to "buy" from "strong buy." IBM had risen to a record $90.125 Wednesday, after its first stock split in 18 years.

General Motors Corp. dropped $1 to $56.75 after Jack Smith, its chairman and chief executive, said the No. 1 automaker won't reach its goal of boosting its share of the U.S. car market this year because strikes crippled production.

Boeing Co. rose $2 to $105.625 after Merrill Lynch said the stock will probably rally after lagging the market this year. Analyst Byron Callan forecast a year-end target of $115 and a price of $125 a share by 1998's close.

Southwest Airlines Inc. fell 87.5 cents to $25.875 after Chief Executive Herbert Kelleher a 10 percent airline ticket tax would "make it very difficult for Southwest Airlines to surmount its earnings of last year," which amounted to a record 56 cents a share in the second quarter. Analysts expected 60 cents this quarter.

Seagram Co. rose 87.5 cents to $40 after selling 30 million shares of Time Warner Inc. shares, more than half its stake, for $1.39 billion, or $46.33 a share, just days after the stock reached a record high.

Time Warner fell 37.5 cents to $46.875. Cowen & Co. analyst Howard Vogel reduced his investment opinion to "neutral" from "buy."

Scholastic Corp. led a group of companies announcing job cuts and restructuring plans. The children's book publisher rose $3.125 to $30.50 after saying it will cut more than 400 jobs, close or sell several magazines and trim executive salaries in an attempt to return to profitability.

Donna Karan International Inc. rose 37.5 cents to $11.625 after saying it will cut costs by trimming its U.S. work force by 4 percent and reducing its annual number of runway fashion shows, to boost declining profit.

Pub Date: 5/30/97

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