You're not. The Grand Old Man (a.k.a. The Devil, a.k.a. Hiroshi Yamauchi) set up that cash fund in case there was ever a financial crash so terrible that the video game market collapsed in on itself. He set this up so Nintendo wouldn't be bankrupt and could get back on its feet.

Yamauchi was a lunatic and he nearly sank the company's relations with third party developers, but he was something of a fiscal wizard.

So your telling me the Wii/DS makes more money than Sony BMG, Sony Pictures, and Sony computer entertainment?

mhm..

Actually, no. Sony's revenue is, to quote Grampy's post, "more than eight times as big as Nintendo's."

Nintendo is just absurdly profitable.

Unlike Sony, Nintendo has a good business plan and doesn't throw away their money.

Then how can nintendo buy all of sony then? If sony makes 8 times as much revenue as nintendo? Makes no sense

Because they spend even more money.

Sony's market value is about 22 billion dollars. That's how much it would take to buy every single stock in the entire company.

Nintendo has nearly that much in cash. They could buy a controlling share in a heartbeat.

Revenue is the raw amount of $$$ that a company gets, profit is how much money you REALLY make.

Say it costs $100 to make a game system and Sony is selling them for $101, sell a thousand and you have $1000 profit, but over 100,000 net revenue.

Say Nintendo makes a console for $20 and it sells for $50, sell 1,000 and you make $30,000 profit despite having less than half the total revenue.

get it?

Exactly, revenue is all well and good, but profit ultimately determines power

Of course, in real life situations, companies offer a price-per-stock much higher than the current market value to buy a controlling majority. So, Nintendo could possibly buy a controlling majority of Sony using cash only, but not the whole company. Now, if they were to pay in shares, then there'd be no problem...

Anyway, this just goes to show that revenue is a direct measure of the size and influence of the company, but profitability (and future expectations even moreso) is what determines the market cap.

Interesting post and read.....thank you for the perspective.