Nike's ( NKE) shares were being pressured on three fronts Friday following an earnings miss, a legal setback and an analyst downgrade.

The Beaverton, Ore., sneaker giant reported an 18% rise in fourth-quarter earnings, helped in part by strong overseas sales, but the results missed Wall Street estimates by a penny.

Shares of the company were dropping 3.2% in Instinet premarket trading at $53.70.

Nike earned $246.2 million, or 92 cents a share, in the quarter ended May 31, compared with $208.4 million, or 77 cents a share, in the previous-year quarter. Revenue rose 11% to $3 billion.

The company said U.S. revenue increased 2% to $1.2 billion, but U.S. athletic footwear revenue was $797 million, down 3%. European revenue rose 20% and Asia Pacific revenue increased 22%, both helped by currency exchange rates.

Nike noted that worldwide athletic footwear and apparel futures orders scheduled for delivery between June and November 2003 total $4.9 billion, 4.4% higher than orders reported for the same period last year, and also helped by exchange rates. By region, U.S. orders fell 10%; Europe rose 17%; Asia Pacific increased 20%; and the Americas were up 4%, the company said.

Merrill Lynch analyst Virginia Genereux cut the company's investment rating to neutral from buy Friday. The earnings shortfall and orders numbers were below her forecasts and at $56.90, she said, the shares aren't cheap relative to peers.

Genreaux also said the relationship between Nike and Foot Locker ( FL) doesn't seem to be improving, as Foot Locker ordered at least 50% less merchandise from Nike in the quarter. Foot Locker said in December that it would no longer distribute Nike shoes.

Additionally, "Nike's outlook calls for fiscal 2004 earnings growth to be back-half loaded." But, the analyst said, "A lot can happen between now and then."

Also Thursday, the Supreme Court dismissed an appeal brought by Nike in a lawsuit alleging that its public defense of overseas labor practices violated a California false advertising law.

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