Nintendo Shares Rise to Record

[Readykilowatt]

Shares of Nintendo Co. surged to a record as JPMorgan Securities Japan Co. started coverage of the company with an ''overweight'' rating on its earnings prospects from the Wii game console.

The stock climbed 3.2 percent to 37,450 yen at the close on the Osaka Securities Exchange, the highest since the Kyoto-based company was listed in January 1962. The broader Topix index gained 1.2 percent after the yen fell to a record low against the euro, boosting the value of exports to Europe.

``The stock's rally reflects investors' positive sentiment about Nintendo's earnings,'' said Junichi Misawa, who oversees $655 million at STB Asset Management Co. in Tokyo. ``The yen's exchange rate has a big impact on the company's net income,'' contributing to the share gains, he said.

Nintendo this month raised its annual earnings estimate for the fourth time for the fiscal year, helped by sales of the DS portable player and the Wii console, whose sales outpace Sony Corp.'s PlayStation 3 machine by two to one in Japan and the U.S. JPMorgan analysts Eiji Maeda and Yuko Sekine cited ``strong'' sales of the DS and Wii for the rating, its highest ranking.

``We expect operating profit growth to remain strong over the medium term'' on the continued success of the DS and Wii players, the analysts wrote in a report dated April 13. The analysts forecast Nintendo's shares to rise 15 percent from the current price to 42,500 yen by April 2008.

Shares of Nintendo more than doubled in the past year, outperforming a 17 percent gain in Sony's stock.

Sales climbed 90 percent to 966 billion yen ($8.1 billion) for the year ended March 31, Nintendo said in a preliminary earnings statement on April 5. In January, the company forecast 900 billion yen in sales, of which 70 percent comes from overseas.

Net income beat earlier forecasts after a greater-than- expected decline in the yen against the euro and dollar boosted earnings by about 20 billion yen, Nintendo said, without specifying a figure.

The euro rose to a record 161.63 yen after the Group of Seven industrial nations stopped short of saying following a meeting on April 13 that the Japanese currency is too weak.

Nintendo has sold 2.04 million Wii units in Japan since its debut on Dec. 2 last year, Tokyo-based Enterbrain Inc. said last week. Sony has sold about 812,000 of the PlayStation 3 since Nov. 11, the researcher said April 2.

An "overweight'' rating means JPMorgan expects the stock to outperform the average return of shares under its coverage over the next six to 12 months.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a5ofHC9m.lX8

Wow.

 

[Arwin]

This is an interesting counterpoint:

http://ce.seekingalpha.com/article/32106

While the article is about EA, it has some interesting analysis of how third party will have a hard time of making money on the Wii. It chimes with what we have seen happening on the DS. But at the same time, I think one of the comment also rightly points out that developers will simply have to bring their A-game to be successful on the Wii, and rightfully so. But that fact could still hurt the platform.

Personally, I think Nintendo should make more of downloadable games, not just the virtual console stuff, but more like Sony. Right now, I think Sony has a chance to be nearly as flexible and innovative as Nintendo, because downloadable games are low(er) risk, and have a short time to market. It is definitely the future for a certain type of casual games, and a part of that overlaps with what Nintendo is doing. There are quite a few games that could be done for both the sixaxis and the wii-mote.

It will be interesting to see, as there is now so much overlap between the different platforms. In terms of asset creation, the PSP, PS2 and Wii overlap. In terms of motion controls, the Wii and the Sixaxis overlap. All three can do 'retro-gaming'. The PS3 and 360 have overlap in asset creation and online. The 360, PS3 and PC have overlap too, more so for 360 and PC in some ways (potentially including Live support now, XNA, GFW). The DS is unique in assets, but that is not so important because demand on asset creation is accordingly much lighter. At the same time, it has some overlap with the Wii in terms of having a pointing device.

In peripheral and hardware terms, there's also overlap between all of them. For the PS3, you could imagine a C&C type game with a BluTooth mouse packed in, for instance, once those get under $30 build cost (compare Buzz, Time Crisis 2, Guitar Hero 2, etc.)

Lots of possibilities in this coming generation. It's an interesting topic for a more detailed analysis on what the practical ramifications are.

 

[Natoma]

Yea I'm quite happy with my Nintendo stock. I'm up 14% on 200 shares in only 2 months.

 

[Natoma]

What took you so long, I just KNEW you were going to be the second post in this thread... slacker

Thumbing through my $$$ takes time.

 

[NERO]

Thumbing through my $$$ takes time.

Sir,

I see a stock split in your future
Crap, are those shares exspensive!!! But cheers for Pikachu and his kin-folk
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sa article was short but interesting cp.