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greenmedic88 on 28 March 2008
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One conclusion can be reached, assuming the VGC numbers are reliable enough for a realistic estimate. The Wii has not been selling at a rate of 1.8m per month at a direct rate of Nintendo's current stated production of 1.8m/mo.

Assuming the Wii has another strong 400k week to wrap up the month of March, that is 4.136m for the first quarter of 2008. Well under the 5.4m that would be seen with a 100% sell through, with no withheld stock and no stock currently held up in distribution channels on the way to retail outlets.

Of course seeing a 5.4m for Q1 2008 is unrealistic because Nintendo has been shifting stock levels from the three major markets cyclically, and it is assumed that there should be some skimming off of inventory levels in preparation for Q4 2008 sales. More should be added to that stock during Q2 2008 despite the release of MK, which should have a fair effect on hardware sales comparable to Brawl to a lesser extent. Not more.

But that is still over 1 million units sold below current production rates regardless of whether they are being stockpiled or currently held up in distribution channels.

If Nintendo increases production, it is a safe bet to say production rates will not be dropped off prior to Q4 due to the lag time that occurs between an announced production increase and the time that extra production reaches retail outlets. If they increase, it will be sustained leading into Q1 2009.

The question is what will be the rate of production increase if any. Next week will provide the telling facts when the quarterly report is released.

Even with a slight production increase, 40-41m is still a reasonable estimate, even assuming a near 100% sell through. 32-33m by the end of Q3, keeping mind there will always be a discrepancy between production rate and sell through rate. 2008 will be another great year for Nintendo without question, but many of the expectations being posted remain unrealistically optimistic.

Many still exceed the annual projections released by Nintendo considerably. If these were genuine expectations, those with the extremely bullish estimates would be buying as many shares of Nintendo as they could get their hands on as that would mean they are saying the stock price is undervalued in proportion to the gap between their estimates and Nintendo's estimates.

Wait for another week for that report. Those who genuinely believe their estimates, should be doubling down on Nintendo's ADR now at $65 if they didn't already do so back in mid January when it stumbled and was trading in the mid $50s.