Seems the money-market-fueled stock dip Nintendo suffered last week isn't over yet. Bloomberg is reporting that the company's stock tumbled down 5.9 percent today to its lowest point since early July '07.
The reason for the precipitous fall isn't so much Nintendo's recent performance. According to Bloomberg, the stock sell-off for Nintendo and other export-based Japanese companies seems to be based on the recently reported rapid contraction of the U.S. service industry, which has also caused problems for the U.S. stock market. Traders are reading the contraction as a strong sign of a long-predicted U.S. recession, which means less money to go around for non-essentials like video games.
Will less discretionary spending mean tougher times ahead for the games industry, or is huge growth last year indicative of a somewhat recession-proof sector?
yes i know the first part of the article has already been submitted, im just adding to it with the bloomberg analysis, thought it might be relevant, so dont shoot me :).
@pilias_simber, May I also add in the fact that from my browsing retailer ads since the start of January, the first time I have seen a retailer advertise that they have Wiis is this past week (not a good sign for supply in January for the Wii).
The New Year is a busier period for Japan than before Christmas is for the West as well so it would make sense to keep supply in Japan decent during this time.
Also, if I understand correctly, the Wii IOU's issued in December count towards that month's sales, not January's which I don't think that many people are aware of, just like the 4 week vs 5 week month. Last year's January period started a lot earlier too when things were still calming down.
I'd be tempted to say even 35-37k is optimistic though of course perfectly attainable if the supply is there.
Well I personal would go more the supply site than the demand site. Christmas Nintendo did this year with the Wii the same that did it with the DS last year: Fly them in, to keep up with demand. This automatically leads to lower supply afterwards, because they need more time by shipping them. And then there is Japan, having the highest sales end of Dec/ begin of Jan.
Where was the DS last Jan? I think Nintendo just didn't ship that many we are forecasting.
@Just_Ben, I was just about to post the same thing.
There are a number of things to keep in mind with this stock when looking at the Jan Future:
1. Jan is only a 4 week period this year, last year it was 5 weeks, some people may not realize that.
2. Last Year Jan Wii sales remained high due to it being a new release, since the Wii has been out a while we can expect a temporary slump in sales for the first half of the month, as per usual across the board because people are still recovering from the Holiday season and do not purchase as many new electronics. I would estimate that to be somewhere around 75-85k for these first two weeks.
3. I would estimate that when the sales pick up again we can see around 100-125k sales/week for the second two weeks.
Jan Future should be valued anywhere from 35 DKP - 37 DKP
@pilias_simber, I don't have a certain answer on this, but I guess it would count when they pick the system up. A rain check is basically like a pre-order for something that's already out.
However, there were reports that those systems mostly ended up available and taken by consumers before the end of December, so most of them should already be accounted for either way.
@Jesse2050, It really all depends on lifespan for the Wii and when Nintendo introduces the next Wii. So 100 million is possible, but depends on a set-up of different factors. I would not expect (as of this time) anywhere over 110 million, but I can see why someone would reason 100 million.
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The reason for the precipitous fall isn't so much Nintendo's recent performance. According to Bloomberg, the stock sell-off for Nintendo and other export-based Japanese companies seems to be based on the recently reported rapid contraction of the U.S. service industry, which has also caused problems for the U.S. stock market. Traders are reading the contraction as a strong sign of a long-predicted U.S. recession, which means less money to go around for non-essentials like video games.
Will less discretionary spending mean tougher times ahead for the games industry, or is huge growth last year indicative of a somewhat recession-proof sector?
yes i know the first part of the article has already been submitted, im just adding to it with the bloomberg analysis, thought it might be relevant, so dont shoot me :).