They better work on some awesome stuff with that money!

awesome job nintendo :)

@wfz: Since i'm not familiar with the case, i have to take your stepfathers word for it.

The most likely case however is, how much faith the market has for the buyout to happen and how much people believe the buyer is willing to pay for it.
It's more a rule than exception that in a similar case the value goes up and down depending on todays rumours.

Usually it's "per profit", but revenue plays a big part as well (think about companies that post losses for example).

@Saicho: Thank you. I believe i said that.

5 billion dollers? You know what I can do with that money?

Anything except buying Nintendo

One of the usual rule used for valuation of companies is future P/E.
Which means price/ future earnings.

The idea is that you take the total company market valuation and divide it by the expected profit for the next year.
You get a number, depending on the company sector and it's growth potential the value of that number will tell you whether the stock price is too expansive or not.

P/E in the 19 were common before the crash, with company with huge growth potential having P/E as high as 40 ( which means the company is worth 40 times the money it will make next year).

With the crash P/E have fallen down a lot and till the market stabilize people are probably still trying to find out what a good P/E is for most companies.

@bdbdbd

I thought you meant something different with your last sentence. I'm glad we are clear! :)

@Saicho: I just made it as a remark about what is inflating the expectations. Ail went pretty well into detail about the matter.

So in a single year Nintendo has made more money than Sony's entire game division since it was opened.

I have to say, Nintendo knows how to run a business.

give it to sony to keep them healthy