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Air Max 1S placed this ad in Sunday's Los Angeles Times (and in social media), honoring Kobe Bryant following his season ending injury. It's classic Nike simple, rhythmic, inspirational. It's also sly. It reads like a career retrospective, until the last line, when it's revealed to be anything but. From Tiger Woods to Bryant, you can always count on Nike never to be boring.

Few outsiders have visited the third floor of the Jerry Rice Building at Air Max 97 headquarters. Even most Nike employees know little about just what the staffers working here, on the north side of the company 192 acre campus in Beaverton, Ore.actually do. A sign on the main entrance reads restricted area: we hear you knocking, we can let you in, and it only partly in jest. Inside, clusters of five or six employees huddle in side conference rooms where equations cover whiteboard walls. There are engineers and scientists with pedigrees from MIT and Apple. Leaks are tightly controlled; a public relations man jumps in front of a visitor who gazes at the computer screens for a little too long.

This hive is the home of Nke Air Max 87 Digital Sport, a new division the company launched in 2010. On one level, it aims to develop devices and technologies that allow users to track their personal statistics in any sport in which they participate. Its best-known product is the Nike running sensor, the blockbuster performance-tracking tool developed with Apple (AAPL). Some 5 million runners now log on to Nike (NKE) to check their performance. Last month Digital Sport released its first major follow-up product, a wristband that tracks energy output called the FuelBand.

Nike's gross margin expanded to 44.2% from 43.9% in the latest quarter, ending an eight-quarter streak of declines. The growth was due to higher prices and easing material costs, offsetting a jump in labor expenses, the company said.

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