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Nintendo trails only Toyota as the top company in Japan

Nintendo’s runaway success of the DS handheld system and Wii console have skyrocketed the company’s value. Now with both the leading portable and home gaming total sales worldwide, Nintendo is once again sitting at the top of the videogames industry.

On the mere strength of its new gaming hardware alone, Nintendo has roared past other Japanese corporations to now become the second most-valuable active stock in Japan. Nintendo is now a more valuable trading company than Canon Inc. and is surpassed currently only by Toyota Motor Corp, according to Reuters.

Nintendo’s stock has been steadily rising since last November, at the time of the Wii’s launch. In late June, Nintendo overtook Sony in market share as the company became one of the 10 most valuable companies in Japan. Then in July, Nintendo took fifth spot on the list of largest companies in Japan.

Despite showing no first-party presence at the Tokyo Game Show, third parties showed software for both of Nintendo’s systems. Games for the Wii and DS ranged from classic RPGs to beauty and health software for women.

"At the Tokyo Game Show last week, Nintendo wasn't there officially. But there were a lot of software companies who are dedicating software to Nintendo platforms," KBC Securities analyst Hiroshi Kamide said in the newswire report. "I think it's reasonable to think that this Christmas Nintendo strategy of catering to both core and casual gaming markets will succeed again."

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Thats pretty huge
By FITCamaro on 9/25/2007 10:27:34 AM , Rating: 1
Considering how big a company like Sony is compared to Nintendo.

That just shows you how poorly Sony is doing. That a company who's only business is gaming hardware and software can overtake a company who has multiple divisions in Computers, Home Theater, Gaming Consoles, Personal Electronics, etc.




RE: Thats pretty huge
By mdogs444 on 9/25/2007 10:30:58 AM , Rating: 2
I'm by no means a Sony fan, but I dont know if you can interpret that as Sony doing poorly, as im sure they are still making lots of money.

Perhaps their net profits are lower and operating expenses higher....but all in all, they are still in a better position than alot of companies out there.


RE: Thats pretty huge
By omnicronx on 9/25/2007 11:00:55 AM , Rating: 1
Thats not his point, Nintendo essentially only has two products and they are still able to outperform Sony, who has multiple divisions in multiple areas. You would think selling, consoles, phones, Televisions, audio receivers and speakers, etc etc, you would be able to outperform a feeble video game company.


RE: Thats pretty huge
By h0kiez on 9/25/2007 11:09:57 AM , Rating: 2
Well, it probably doens't help that some of Sony's divisions (e.g. CONSOLES) are a huge cash sink, not a cash cow like they are for Nintendo.

The fact is that Sony's choices in this console gen have thus far failed to pay off and have hurt sales of their console dramatically. That being said, the race is not over and we'll just have to wait and see.


RE: Thats pretty huge
By h0kiez on 9/25/2007 11:09:59 AM , Rating: 2
Well, it probably doens't help that some of Sony's divisions (e.g. CONSOLES) are a huge cash sink, not a cash cow like they are for Nintendo.

The fact is that Sony's choices in this console gen have thus far failed to pay off and have hurt sales of their console dramatically. That being said, the race is not over and we'll just have to wait and see.


RE: Thats pretty huge
By Flunk on 9/26/2007 1:20:55 AM , Rating: 2
Your argument does not make sense. You are saying that Sony is doing poorly because of money losing divisions such as their console division but Nintendo makes nothing but consoles.

I think it would be better off to blame poor business decisions regarding product development. Consoles do not have to lose money. Sony's does because they designed a console two expensive to sell for a profit.


RE: Thats pretty huge
By BansheeX on 9/25/2007 12:38:58 PM , Rating: 5
That's actually a pretty poor way to look at it. There's much less competition in the video game arena than in electronics in general. Nintendo makes a crapton of money selling things with huge net profits and their IP is great, while Sony dabbles in many crowded and low margin markets like electronics.

Additionally, Nintendo being a more profitable company has no correlation with the quality of the hardware or games. Fox News used to have the most viewership (still?). Britney Spears sells a crapton more CDs than a lot of great bands. By your logic, fans of hers should now revel in that success as being proof that she is a better artist. Likewise, wii fans consistently use sales as a measure of who is "winning." I consider winning pushing the boundaries of hardware, delivering a lasting product, and giving developers the opportunity to make their ideas as fast and beautiful as possible, stylistic and realistic alike.


RE: Thats pretty huge
By omnicronx on 9/25/07, Rating: -1
RE: Thats pretty huge
By Shadowmaster625 on 9/25/2007 3:17:39 PM , Rating: 2
your post gave me some serious deja vu. The whole Fox News vs gaming system quality thing. lol


RE: Thats pretty huge
By neothe0ne on 9/25/2007 4:15:31 PM , Rating: 2
You forgot the part where game developing is an incredibly expensive undertaking, especially when you're required to make that game in High Definition, have internet features, and can only make a decent return if many people buy your game.

I'm not going to spell it out any clearer than that, but that clearly debunks your comparison of console quality to news and music quality. Besides, the fact that you think games need to be as beautiful as possible shreds your credibility instantly. Plenty of good games don't require much in the way of graphics, and even if they do, Star Wars Rogue Squadron II, the GameCube launch title, still looks better than several games I'm eying today.


RE: Thats pretty huge
By BansheeX on 9/25/2007 7:57:52 PM , Rating: 2
"You forgot the part where game developing is an incredibly expensive undertaking, especially when you're required to make that game in High Definition, have internet features, and can only make a decent return if many people buy your game."

And couldn't that be seen as an incentive to create a great game rather than a poor one? HD and online gaming are irrefutably good things, and you don't want them because we aren't going to get a thousand assembly-line releases per year anymore? HD was a long time coming and it absolutely has to happen for tv as well as games, however unnecessarily costly that might seem to you.

"Besides, the fact that you think games need to be as beautiful as possible shreds your credibility instantly."

I never said that as a blanket statement that included old games as you're reading it. Back in their day, many of those old games WERE state of the art, contrary to some people's idiotic belief that graphics don't mean anything to gameplay, and thus should never change. According to that rationale, Nintendo should still be on the NES right now. New consoles come out for a reason and they should absolutely push the boundaries of what we can potentially create in a game. Yes, that includes as beautiful and lifelike environments as possible, real and stylistic alike. For it is true that the same gameplay with better graphics is undeniably better. If you think a peripheral that makes no sense for most genres and can't compare to a mouse or gamepad for speed and accuracy is going to make up for that, then you've bought into the Nintendo marketing machine.


RE: Thats pretty huge
By drunkenmastermind on 9/25/2007 8:14:31 PM , Rating: 2
Whats more expensive; making movies in the computer or making them in real life?


RE: Thats pretty huge
By ani4ani on 9/25/2007 1:32:33 PM , Rating: 2
Being a "one trick pony" has its advantages, as we see with Nintendo currently, nimble and focused. The disadvantage of course when everyone becomes bored with the trick, it can go south very quickly.


RE: Thats pretty huge
By kmmatney on 9/25/2007 5:06:07 PM , Rating: 2
Nintendo isn't just a two product comnpay - Nintendo "owns" the Pokemon brand which is HUGE. I've witness the Pokemon craze myself while in Japan for 10 days for work. Besides the cards and video games, you can buy Pokemon cereal, action figures, clothes, etc..I bought some really nice Pikachu rice bowls for my kids. Nintendo has a lot more going for it than just the Wii and DS.


RE: Thats pretty huge
By afkrotch on 9/26/2007 4:24:58 AM , Rating: 2
Do you even understand stocks? Being large and being small does play into actual market value, but normally in the reverse of what ppl consider. Why is this? With a large company, they need to move into new fields to be able to not only increase revenues, but also increase market value.

If all your company does is make games, it's possible to move into new markets to increase your revenue and market value. Course you also have less markets that you are in and if they do well, your market value does well.

Sony is in pretty much every field having to do with electronics. Nintendo just does games and consoles. If they decide to start making tvs for their consoles, this will help to increase their revenue and market value (if they do well). If not, it'll decrease.

It's like how Apple has higher market value than Dell, but Dell makes a much higher revenue.

It's all about how high your earnings will go or able to go. If it's expected that you'll do well, more ppl will invest in your company, and the higher your market value will go up.

Sony makes $70 billion a year. Nintendo makes $7.8 billion a year. Don't mistake market value with a company's revenue.


RE: Thats pretty huge
By ZavyZavy on 9/25/2007 11:36:00 AM , Rating: 3
I guess you're right in the sense that company comparisons aren't necessary. Although as a Nintendo fanboy myself, I’m glad that they are doing well.

Nonetheless, I think the bigger question is: what will this mean for gaming and those who love games?

The DS and the Wii were (arguably) created because of the company being backed into a corner. Granted, during the days of the Game Cube the company was still well run and constantly churned out profits.

Will Nintendo become complacent because of their new position? Will Microsoft and especially Sony go into over drive to wow us with brand new appealing and innovative games?

The one thing that is certain – these are good times for gamers and I for one have enjoyed Microsoft’s entry with the original Xbox, loved Nintendo's stamina, envied Sony's wit and was saddened by Sega’s console exit.

I hope competition will give us many more great gaming days.


RE: Thats pretty huge
By acer905 on 9/25/2007 12:01:07 PM , Rating: 2
This is how i look at it. Sony can't be happy about this. Microsoft probably isn't bothered as much, but isn't going to be happy either. So both of them are going to do everything in their power to fight back, and try to knock Nintendo off of this spot. So i agree, its a good time for the gamers. Because right now things have been stirred up to the point where all the companies have it kicked into overdrive, and i forsee a lot to come.

That said, i wish Sega would come back with a new console in a sneak attack that would spin the world around and make them go "wait, what?" because i miss Sega

But long live this mass fight!


RE: Thats pretty huge
By StillPimpin on 9/25/2007 5:40:27 PM , Rating: 3
quote:
This is how I look at it. Sony can't be happy about this. Microsoft probably isn't bothered as much, but isn't going to be happy either. So both of them are going to do everything in their power to fight back, and try to knock Nintendo off of this spot.


And exactly how are they going to fight back. They already have the technically superior hardware, and Microsoft has just launched its biggest franchise game Halo 3. Sony hasn't really geared up yet with any must have exclusives, and even Heavenly Sword is reported to be not as good as the hype.

So again, what can they do? Nothing, except wait for Nintendo to slow down so that they can catch up. And that will only happen when and if the novelty of "THE Wii" wears off.

Or, the can do as Nintendo has done and STOP! ALIANATING! CASUAL! GAMERS! I believe that as soon as Sony and Microsoft learns that not every "gamer" is a core/hard core gamer, they will start to make some headway against the juggernaut that is for Nintendo.

This is coming from a 29 year old guy who was very passionate about gaming until life kicked in and I had more responsibility than time to play games. And being a somewhat responsible parent, I won't even consider a PS3 or 360 because there aren't enough games that I can enjoy with my young (6, 3 and 2 year old) children. I simply don't have the time to invest the hundreds of dollars into one of these systems that will eventually end up collecting dust because I'm not going to spend more time with it than I do my family.

The Wii on the other hand is a system that I can pick up, play and put down with my kids. They don't have to know how to execute certain analog pad and button combinations to successfully play a game of golf, or boxing, or race on a race track. And that is where the Wii is drawing its appeal right now, parents like me.

And before I get flamed I'm not suggesting that if you do play 360 or PS3 games with your kids that you are a bad parent, just that I believe that there are more parents that share my views and that is why the Wii is so successful right now.


RE: Thats pretty huge
By Icelight on 9/27/2007 1:35:54 PM , Rating: 2
quote:
That said, i wish Sega would come back with a new console in a sneak attack that would spin the world around and make them go "wait, what?" because i miss Sega


I used to think I'd like that...but I'm not so sure any more. Sega has pretty much driven all of their series into the ground. They really haven't developed a decent game in years (published is another matter). I would like the old Sega back, sure...but the 'new' Sega...I'd prefer just to see them die off rather than see the next iteration of their key series turn into garbage yet again.


RE: Thats pretty huge
By Samus on 9/26/2007 6:27:20 AM , Rating: 2
Last I checked, Sony gross income is 60 billion dollars/year, but net profit is around 1 billion. In otherwords, Sony grow's 1.6% per year.

In comparison, last I checked, Samsung, a South Korean company that compete's with Sony in many electronic markets, gross income is 10 billion dollars/year, with net profit in excess of 5 billion.

This can be related to Sony having more R&D, manufacturing costs, being a Japanese-based company (hard to justify considering other Japanese-based companies have no trouble turning huge profits) or just plain ol' corporate expendatures.


RE: Thats pretty huge
By rippleyaliens on 9/25/2007 10:59:27 AM , Rating: 2
I applaud Sony for some of its products. I have only had Sony TV's in my life. from my 13inch basic, to my 36 XBR Wega.. I was a serious StarWars Galaxy player (Sony Owned).. But as of late, it is Sony's turn to ride the Rollercoaser on the downward slope.
Serious mishaps within last 18 months have caused Sony to be in a little of Marketing Trouble. PS3, however powerer ful, hit the one thing that people are afraid of. $600 prices.. That my friends alone causes people to buckle on buying their product. Even their TV's are higer priced than their competitors, BUT THEY ROCKED.. PS3, and PSP ( i wona PSP) are awesome, BUT still the $$ for what you get is not there.
Sony will get its turn again in the console market, But not this round,
maybe next round. After some lessons from Nintendo. (game play is actually important, lol)
and Microsoft (Game titles are important) next round Sony will have a solid produt, but until then...


RE: Thats pretty huge
By RamarC on 9/25/2007 11:18:21 AM , Rating: 2
stock captilization is completely misleading when comparing companies. remember when aol bought time warner by using its exorbitantly priced stock? time warner had significantly more real properties, more revenue, and more income but aol had a larger stock captilization.

same with nintendo vs sony, matsushita, toyota, honda, etc. nintendo's other financials pale in comparison to those giants.


RE: Thats pretty huge
By SigmaHyperion on 9/25/2007 12:12:30 PM , Rating: 2
Okay, let's look at just profit then, since that's what really matters...

Nintendo will make more profit this year than Sony
It will in fact make 3 times the profit with just 1/9th the revenue

Nintendo will make more profit this year than Honda
It will in fact make twice the profit with 1/12th the revenue

Nintendo will make roughly the same profit this year as Matsushita.
But do it with just 1/10th the revenues

Nintendo will make more profit this year than Mitsu Heavy
In fact, it will make 6 times the profit with 1/4th the revenue

Nintendo won't make more than Toyota, but then it's Market Cap is nowhere even near that of Toyota. Toyota completely dominates the market cap rankings in Japan. Even in the #2 spot, Nintendo would need to triple in size before it could even consider going against Toyota.

(note the above are of course rough figures based on estimates of earnings)


RE: Thats pretty huge
By RamarC on 9/25/2007 9:58:04 PM , Rating: 2
sorry, but your logic is faulty since it is based on profit only. gm and ford posted losses in '05. but using your logic, ANY company that posted a profit in '05 was bigger/better than gm and ford. single year profits and market cap means little when handing out the title of "the biggest or most valuable company". c'mon, mc hammer made a ton-o-money in the 80s but he never approached the rolling stones in real worth.


RE: Thats pretty huge
By SigmaHyperion on 9/26/2007 12:20:49 AM , Rating: 2
It's not like Nintendo was a flash in the pan like MC Hammer. Nintendo has been one of the largest companies in Japan for decades, it's just recently taken a sprint to the forefront is all.

Nintendo is sitting on well north of $10 billion in cash right now. There are only a handful of Japanese companies with more cash than Nintendo has and none with as little debt as it has (which would be absolutely none outside of AP, no long or short term debt at all). I'm not saying that sitting on cash is necessarily a good thing, but Nintendo didn't grow that kind of cash horde overnight. It's been a hugely successful, highly profitable venture for the better part of 20 years.

Besides, no matter how "misleading" a number market cap may be, in the end it's all that matters. Sure, AOL probably should never really have been able to buy Time-Warner. But, you know what, it did. Arguing over the real value of something is completely irrelevant when it's got a pricetag on it because that's how much it is worth to the only person that matters -- the person selling it.

Whether the number is "misleading" is completely irrelevant because at the end of the day companies are bought and sold by that number alone. Does it make "sense"? No, not really. But it's not misleading, it's the simple truth -- Company X is worth more than Company Y because the market says so, not because you agree.


RE: Thats pretty huge
By Yongsta on 9/25/2007 5:51:32 PM , Rating: 2
Also Sony Pictures & Sony Music Division.


Anywhere to go but down?
By Sunrise089 on 9/25/2007 10:55:07 AM , Rating: 2
I'm not stock expert, and I AM a Nintendo fan. Still, I have to think the stock has to correct downwards. Nintendo simply doesn't seem like it would have the revenue, assets, or profits to rival their big industrial conglomerates. I know companies like Google have huge market caps and seem to retain them, but I'm wary when the value seems to stem from 9 months of positive news reports.




RE: Anywhere to go but down?
By omnicronx on 9/25/2007 11:06:31 AM , Rating: 2
You are not the first person to concede that the Nintendo's stock is bloated, and it will probably fall in the near future if Nintendo hits a speed bump of any kind.


RE: Anywhere to go but down?
By SigmaHyperion on 9/25/2007 11:52:27 AM , Rating: 3
The value isn't stemming from news reports, it's stemming from financial reports.

It may not have the revenue numbers or assets to rival the big conglomerates, but it's got the profit numbers and that's what matters more than anything. It doesn't matter if you didn't sell that much stuff or needed a lot of assets to do it, if you made a huge amount of profit. In fact it's better that you didn't need those things to generate that profit.

Nintendo, the little guy on the block, will pull in 2 BILLION dollars in profit this year. That's not exactly small. That's 4 times what Sony did last year. And despite Nintendo's relatively 'niche' market, that's still 1/3rd the profit that Canon will make and 1/8th the profit that Toyota will make. I think for Nintendo of all companies to make even "just" 1/8th the profit that Toyota will make is pretty damned impressive.

Fact is that Nintendo is rolling in money (somewhere north of $10B in cash in its' coffers more than almost any Japanese company, not bad for a small fry) and has an average P/E ratio (that's stock price compared to company earnings). If anything it could actually stand to be priced easily 25% higher and still be somewhat fairly priced.

Generally speaking a company with a P/E ratio of 12-20 is "fairly priced". A ratio north of 30 is "over-priced".

Nintendo is at 15. It's been as high as almost 30 (that's when it was hyped up on the news reports) and has corrected to a stable value. It's most definitely not overpriced or over-hyped.

Sony is at a rather high 35. So it's price could use a little correction downward. Right now investors expect earnings to come back up so they're not worried enough to sell on what they feel is a little hiccup in earnings. But if Xmas is any less than spectacular for Sony we'll see a selloff for sure.


RE: Anywhere to go but down?
By Dfere on 9/25/2007 12:59:34 PM , Rating: 2
You must be a day trader!

While I agree profit is the most important factor in valuing acompany, I think you completely ignore risk. A highly profitable company with only a few products is incredibly risky compared to a conglomerate.

While impossible to quantify exactly, you just cannot ignore this. Nintendo's future profit is highly out of the control of the top management as it depends on the profitablility of one very specific industry. As that industry goes, so does Nintendo. Even the big automakers realized this years ago and diversified into financial services...


RE: Anywhere to go but down?
By SigmaHyperion on 9/25/2007 2:30:26 PM , Rating: 2
I agree completely Dfere.

Sony is seeing this now. While a diversified company themselves, their profit centers were not diversified. For many years they relied on double-digit margins in their gaming division to offset losses they were taking everywhere else. When the profits went away (and in fact offset by multi-billion losses on development) all of a sudden all the red ink was exposed everywhere.

It certainly won't take terribly much to make Nintendo's current profitability go dry. I'm certainly not advocating buying their stock currently if you're looking for growth, it's difficult to imagine Nintendo being able to pull even more money out of their pocket. But their stock is currently fairly-priced and not over-hyped.

One thing to remember about Nintendo is that they've been able to do remarkably well even when 'the market' said that they weren't. Nintendo may have been getting it's butt stomped marketshare wise last generation, but it was still exponentially more profitable than MS or Sony's gaming divisions were. It's been up and down since the days of the original NES, but it's shown an ability to adapt to the changing market. About the only thing that's going to drive Nintendo out of the business is a complete meltdown of the entire video game entertainment industry which isn't very likely to say the least. Nintendo's fortunes might wane, but they're not going to go away anytime soon. Even when it's "getting beat" it still somehow manages to win at the bank.


RE: Anywhere to go but down?
By Shadowmaster625 on 9/25/2007 3:23:24 PM , Rating: 2
Keep in mind that there has yet to be a real killer app for the wii. Something that turns into a phenomenon...


RE: Anywhere to go but down?
By blojib on 9/26/2007 4:24:44 AM , Rating: 2
I think a lot of people would consider Wii Sports to be a "real killer app" for the Wii.


RE: Anywhere to go but down?
By Xavian on 9/25/2007 3:39:08 PM , Rating: 2
Keep in mind that the Video Game Industry is "the" fastest growing entertainment market right now.

If it keeps growing as fast as it is, with Nintendo at the top, they could be massive.


RE: Anywhere to go but down?
By michael2k on 9/26/2007 10:20:00 AM , Rating: 2
You could have said the same thing of Apple last year, or two years ago, too.

Nintendo merely has to continue to increase sales in order to maintain and grow their high stock value. And that is trivial when you consider:
Only 11m Wiis have been sold worldwide
Over 120m PS2 have been sold to date

So Nintendo has a possible market of 120m out there; larger when you consider that they are targeting nongamers as well.

Nintendo has room to increase their userbase over 10 times (and thus their sales and profits) in the next six years.


bigger version of that picture!
By noxipoo on 9/25/2007 12:21:06 PM , Rating: 2
i wanna see a bigger version of that wii tennis chick!




By sabrewulf on 9/25/2007 12:58:51 PM , Rating: 2
Finally someone gets to the issues that really matter!


RE: bigger version of that picture!
By MattCoz on 9/25/2007 5:34:36 PM , Rating: 2
Stock Market value vs. actual value
By ChipDude on 9/25/2007 4:02:07 PM , Rating: 2
This is pure journalistic headline grabbing no different then reports of Google's valuation.

Don't confuse stock market value which is what traders will pay for a share of stock versus intrinsict value of a company. Sure in principle you are actually buying a share of the company, but the reality of the whole stock price is that the actual price gets skewed by growth, margins, and other measurements can really distort our views. Today we choose to buy and sell based on far more abstract measurements then the brick and mortar value of the company and as a result we often see high fliers crash once traders realize their errors.

I am not criticizing Nintendo or its valuation. No question they took a different and highly criticized approach to their next generation WII and blew everyone away. They are making lots of money and as such the stock is booming as it should to reflect this.

Sony on the other hand has done about everything wrong you could with their PS3 and can't fix it. But sony is a huge company that defies any comparison to Nitendo.

They play and are leaders in so many areas; TVs, cameras, computers, video, etc. etc.

Put it another way, if Nintendo was to be destroyed by some freak of god vs Sony there is no question which would be the greater loss. Sorry, SuperMario will be less missed then the long list of sony things that migh dissapear.




By BansheeX on 9/26/2007 1:05:21 AM , Rating: 2
"Put it another way, if Nintendo was to be destroyed by some freak of god vs Sony there is no question which would be the greater loss. Sorry, SuperMario will be less missed then the long list of sony things that migh dissapear."

Nintendo could never truly be destroyed. The worst that could happen is that they simply stop making hardware and focus on making games for MS and Sony. Kind of like Sega, but without the erratic results. Zelda and Metroid on that kind of hardware would be awesome, that's for sure. That would have only happened, though, if people didn't buy the wii.


Pokemon!
By kmmatney on 9/25/2007 5:02:45 PM , Rating: 2
I spent 10 days working in Japan this year, and spent a few days in Yokohama near a large shopping mall. The mall had nice stores (both Japanese and Western shops) which were mostly empty. However there was a Pokemon store that was absolutely packed with people. Even outside the store, were over a hundred kids waiting to go inside the store, or just hanging out with their gameboys playing pokemon games. It was one of the most amazing things I've ever seen - I wonder how much of nontendos worth is attributed to Pokemon.




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