Vinniegambini said:
You bring forth a very good question. I don't know the answer unfortunately. On my end though, I bought shares when they were at 14.40$ so I am in the red as of late. I should of sold when they reached 17.50$ but said to myself no, they are going to go up more, I'm kicking myself lol. Could of locked some good profits. Nevertheless, the stock is getting hammered currently and I don't know why. The Wii U sales are favorable and what people do not seem to realize is that Nintendo makes the bulk of their money on their handhelds. For example, a 3DS game will cost between 500,000 to 1.4 million to make compared to the 20 million + for consoles; thus, a greater profit margin. Furthermore, Nintendo never brings down the retail price of their games and usually have strong legs. Nintendo posted a loss last fiscal year because of the 3DS selling at a loss and the strong yen. Imagine producing over 13 million 3DS and losing 10-15$ per console and having exchange rates against you - it hurts. Now, that equation is taking care of: Nintendo is selling the 3DS at a profit and even more so with exchange rates now in their favour. Though the Wii U may be selling at a loss, it only takes one game to make the Wii U equation profitable. Furthermore, Nintendo produces more 3DS than Wii U's; thus, profitabily overall is more insured. Going forward into 2013, Nintendo is well positioned for the 3DS as it has an array of titles available to help it grow. In Japan : Dragon Quest VII and Luigi's Mansion in Q4, Monster Hunter 4 in Q1, and most likely Pokemon in Q3. North America: Fire Emblem, Monster Hunter 3G and Luigi's Mansion in Q4, Animal Crossing in Q1. Wii U on the other hand I am more iffy. Consumers are more demanding these days and it is normal as they want to see what they get for their dollar. Nintendo is missing that 1st party software to justify the investment. Nonetheless, Nintendo does have Lego City Undercover and Wii Fit U as aces in their hands - if they do the marketing right! Do a marketing campaign with Lego aiming for kids and it will surely sell well. Furthermore, a marketing campaign that recaptures the magic of Wii Fit and the casuals will hop in. But like I said, the marketing has to be right. I believe that is why Nintendo didn't do that much marketing during the holiday season for the Wii U (they knew the Nintendo fans will buy the first batch), they are waiting for the above titles to market. Hence, if Nintendo plays their cards right, we might see Nintendomination once more. |
Hey I got in at $14 and am kicking myself on not selling above $17 as well - like you I thought we'd see a rally off the bottom up above $18 & possibly above $20.
I too am confused as to why the shares continue to take a beating.
Your point about Nintendo profits being mostly from 3DS sales is interesting. In investing circles you'll often hear arguments that iOS Smart-Phone & Tablet casual gaming spells doom for Nintendo - especially the handhelds.
But for me, the good news for Nintendo, and the ultimate argument against the iOS group-think, is the 3DS is still outpacing the DS in sales after 96 weeks on the market.
The comparison is especially relevant now as both systems have each seen 2 Holiday Shopping seasons over their respective launches. But the fact the DS was launched without any Smart-Phones or Tablets in existence and the 3DS is still outpacing it in sales - says they're having little to no negative effect at all!
I read an interview with Satoru Iwata where he noted that same stat as well.
With big 3DS hardware & software sales, the revamped e-shop, plus the weaker Yen, I cannot imagine any scenario where Nintendo isn't profitable in Q3. If that happens I'll be totally dumbfounded, I just don't think its possible.
Yeah the Wii U is selling at a loss...but the attach rate is easily greater than 1! And that's all the U needs to turn a profit!
And we know the Wii is profitable.
So...logic seems to dictate that every single system Nintendo's selling is making money. Right?
