TheLastStarFighter said:
Shin, you're trying really hard to sound educated and you continue to take a condescending tone, but you have to understand, you have no idea my education, position or anything else. You should refrain from talking in that way, it's unbecoming. 16 billion in assets and 2 billion in liabilities.... yeah, for the sake of our light-hearted, big picture discussion on the gaming form website, yes, we can say that Nintendo has essentially no liabilities. You made the point in your initial post that we need someone of your exceptional education to explain that there is a potential downside to the falling yen for Nintendo. If you know anything about the operations of Nintendo, Sony, Toyota or any major Japanese exporter, you know that they are begging, praying for a weaker yen. The 80 yen dollar is the primary reason Nintendo was in the red last year. The 95 yen dollar should put the company in the black this year, even though it may post on operating loss. A weak yen is extremely good for Nintendo, this is widely known, so trying to sound educated by pointing out that certain costs will increase for the company doesn't make you sound educated, it makes you sound ameturish and fresh out of school, like your trying to point out something the rest of us already know. As far as how greatly undervalued Nintendo is? That would depend, of course, on how much you value their intelectual property, expertese, good will, etc. Nintendo is essentially trading at a value less than the value of their physcial assets. That means the market is saying that "Super Mario Brothers" has no value. When you think that one title, New Super Mario Bro, sold 30 million copies at $39 each, its revenue to Nintendo is upward of $1 billion. That means that Nintendo has the ability to build something at a cost in the 10's of million and sell it for a billion. Essentially this ability is coming for free right now on the markets. Nintendo is a company that typically turns in a billion dollar profit or more each year. I would personally state I think Nintendo is worth at least double its current value. Some analysis projects it will hit about $26 per share by December 2013. I would agree with this. I think its true value may be in excess of $30 and maybe as much as beyond $40, but its hard to say. Right now the company's biggest challenge is to get hardware penetration, wolrdwide for Wii U and in the US for 3DS. It needs that to sell its lucrative software. I would say it will likely do that, at least to some extent if not Wii/DS levels. The investment market does not - yet- largely do to the presiding feeling that tablets and smartphones are the "in" item and eating into traditional gaming platforms. I'm not sold on that idea, but only time will tell. I think that even if Nintendo were forced to sell its software on other platforms, its IPs are extremely valuable... at least enough to warrent a $25+ share price. |
I suppose I'll tackle that response one point at a time.
#1) I never once said Nintendo was going bankrupt or that they were an "upside-down" company. I simply said Nintendo, and ALL companies have liabilities.
#2) You never explain your point about the weaker yen being good for Nintendo. Currency is perhaps that most complex thing in International Business so your statement leaves a lot of to be pondered. Perhaps you're talking about the weaker yen being good for Japanese exports. I'm not really sure. A stronger or weaker currency affects an economy in dozens of ways.
#3) When you talk about Nintendo trading at "less than fair value", which it is, it doesn't necessarily mean that "SMB" has no IP value. The price of a stock reflects every possible aspect of a markets sentiment about that company's value, INCLUDING future anticipations. The fact that the company is trading near it's 52 weeks low (its down again today), DESPITE the NIKKEI and NASDAQ being at all time record highs says a lot. It says that depite the present overall very high sentiment about the economies of the world, people don't have that same sentiment about Nintendo. It's probably the poor sales of the Wii U and the recent announcement of the PS4.
#4) Nintendo lost $527 million dollars in 2012. I'd say Nintendo is doing a fine job of penetrating the market with the 3DS but it may not be able to succeed with the Wii U considering the new consoles being released. Time will tell but if the Wii U can't be successful in the market as the ONLY "next gen" console and can barely outsell the Wii. There are problems.
For the record, my background is an Undergraduate in International Business and an MBA in marketing and management. I've done 3 internships and have 2 years of doing economic consulting, mostly transfer pricing and commodities such as oil and natural gas. I haven't heard anything about your background.
