Not so fast Under Armour, you're being sued by the Chicago Cubs

The two entered into a $10.8 million contract two years ago, but the Cubs have filed a complaint in U.S. District Court in Chicago alleging that UA told them on December 12 that it won't sponsor the team for the upcoming season and that it won't meet any obligations. The Cubs expect full payment of the contract, and note that UA reneged on the agreement after realizing its dire financial situation in December. UA contends that the new Cubs management terminated the agreement after the second season, and a new deal was never agreed upon.

As for UA, the struggling sportswear firm is set to report earnings on January 29. The company has already lowered its 2008 forecast thanks to higher-than-expected cancellations coupled with a drop in orders. Actually, to say UA lowered its estimates may be a bit of an understatement. The forecast earnings between 16 and 18 cents per share on revenue between $179 million and $180 million. This guidance is well short of the expected 50 cents per share on revenue of $209.8 million. If the company misses its already lowered guidance on Thursday, we could see investors jumping ship like drunken fratboy Cubs fans abandon the bandwagon when their team chokes.

How will the new lawsuit impact the stock? I'm not really sure, because I wonder if it will eventually rebound in the $17 region like it did in November and December (both of which were short-lived thanks to overhead trendline resistance). One thing is sure, this will be an interesting situation unfolding in the Windy City; and if the Cubbies lose, they won't be able to blame Bartman or some silly goat. No matter the outcome, this can't be good news for the underperforming performance apparel firm.