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OceanJ on 08 January 2013
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Tarumon said:
TheLastStarFighter said:
Just as a footnote to some of the stock price chat we've had, Nintendo announces a massive title for this fall that will probably move millions of hardware units and sell upwards of 15 million copies and has a worldwide simultaneous release for the first time. What happens to share price? It drops 3% naturally. As game fans and shareholders we can mix our passions, but most investors do not. They do not understand the business. They do not follow games. They follow profits, dividends and hype. NTDOY is stuck in a slump until Iwata says "profit!", and until kids and wives and girlfriends start seeing that fancy touchscreen pad at a friends place and want one of their own and CNN does a story about it. We need to be patient.

 

Back when they "downwardly" revised back in 3rd quarter, their revised numbers were still...unattainable in my eyes. Net Sales of 800 billion Yen by year end when 6 months to date to 9/30/12 was 200 billion.  Some of you are better at recalling history than I am, when has Nintendo ever achieved a 2nd Half vs 1st Half Net Sales multiple of 3 to 1?

I checked some historical numbers from the last 6 years...and you're right, they've never had a Net Sales increase ratio equivalent to 200 Billion Yen in Sept. to 800 Billion by end of March.

Here's the numbers:

  • 2006: 298,817; 966,534  multiple of 3.23
  • 2007: 694,803; 1,672,423 multiple of 2.4
  • 2008: 836,879; 1,838,622 multiple of 2.19
  • 2009: 548,058; 1,434,365 multiple of 2.62
  • 2010: 363,160; 1,014,345 multiple of 2.79
  • 2011: 215,738; 647,652 multiple of 3
If you'll notice, the multiple gets the highest for years when Nintendo products are selling the lowest.  The multiple got to its lowest point at the height of Wii sales, and risen since.  Last year it was at 3, so we can safely bet the multiple will be above 3.
Given that 2011's Net Sales came in at 647,652 Billion...and for FISCAL YEAR 2011 Nintendo sold:
  • 14,285,223 3DS's
  • 10,627,000 Wii's
  • 6,702,658 DS's
  • = 31,614,881 Hardware Unit Sales
And FY2012 is looking to shape up like
  • 4.5 - 5 Million Wii U's 
  • 14.75 million 3DS's
  • 4 - 4.5 Million Wii's
  • 3.3 Million DS's
  • = about 27.3 million Hardware Unit Sales
We are looking at approx  3 - 4 Million fewer total hardware unit sales. :(   BUT...Nintendo's software Net Sales should go up this year.

So Nintendo has zero chance of doing 800B in Net Sales for Fiscal Year 2012 as projected, but it should be higher than 2011 despite fewer total Hardware Units sold.  So we're looking at between 650B - 700B Net Sales.

In 2011 Nintendo LOST money on that 646B in Net Sales.

The big big question of the day is, will they be profitable this year on their 650-700 Billion on the year?  They've projected 6Billion in profits...but that was on 800B in Net Sales...

Answer: It's going to be damn, damn close. And they have a chance of not being profitable 2 years in row.

In their favor:

  • 3DS Hardware's been selling at a profit since September 2011.  The majority of units sold during the Holidays.
  • The Yen though still fairly strong for Nintendo has been weakening in their favor, especially over the Holidays translating to higher profits.
  • More Net Sales in Software, by far the more profitable between it & hardware adds to profitability

But 100 Billion less in Net Sales than they projected...

Too close to call.  I am hoping for some kind of uptick in the stock to approach $14 / share after Q3 numbers come in, praying the pure Q3 profitability gives hope to investors so the stock can climb a bit...then I'm selling a good chunk of my stock, because looking at these numbers I really think we haven't hit bottom yet by a long-shot.