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Nike shares rise on strong 3Q earnings

NEW YORK (AP) -- Shares of Nike Inc. rose to an all-time high after the world's largest athletic gear maker reported third-quarter net income jumped 55 percent, helped by strength in North America.

THE SPARK: Late Thursday, Nike Inc. reported a much better-than-expected quarter. Strength in North America and improvement in Europe all bolstered results. In addition the company's gross margin — the percent of each dollar of revenue a company actually keeps — improved for the first time in 10 quarters, reassuring investors.

THE BIG PICTURE: Like most global companies, Nike Inc. has been dealing with Europe's fluctuating economy and a slowdown in growth in China. Nike has been working to reduce its inventory in China and reworking its offerings there to adapt to the changing tastes of Chinese consumers. It also has been focusing on growth in North America, selling off less profitable brands like Umbro to focus on core brands like Nike. Quarterly results show these changes are working.

ANALYSIS: Cowen & Co. analyst Faye Landes said the quarter was "superlative." She commended the gross margin improvement, strength in North America and improvement in Europe.

"We believe it's onward and upward for Nike, with strong product introductions ahead, the most exciting NBA season in many years and the World Cup around the corner," she wrote.

SHARE ACTION: Shares rose $6.46, or 12.1 percent, to $60.07 in midday trading, after earlier touching an all-time high of $60.25.