Nintendo's Future

[dead718]

Hey everyone, this is my first post in like forever....

But, I was looking at Nintendo's stock today and saw it closed under $14 a share... 2 years ago it was at almost $40 a share. I began doing some research and heard Nintendo was in some financial trouble with the 3DS and such. Does anybody think Nintendo could go out of business in the next few years if the Wii U isn't a smash hit?

[Otacon305]

I hope they go under and have to sell off all their franchises. It'd be nice to see Zelda and Metroid back in the hands of serious devs.

[Generosity of God]

No. Microsoft lost 4 billion with the original xbox. Nintendo would need to do that multiple times before they run out of money. considering nintendo dont usually sell consoles at a loss and that there is always a bunch of consumers who buy them, i find it hard to believe they'll bow out any time soon.

[Viper]

Hey everyone, this is my first post in like forever....

But, I was looking at Nintendo's stock today and saw it closed under $14 a share... 2 years ago it was at almost $40 a share. I began doing some research and heard Nintendo was in some financial trouble with the 3DS and such. Does anybody think Nintendo could go out of business in the next few years if the Wii U isn't a smash hit?

Not at all. I'll break it down for you.

Nintendo stock dropped a lot since the Wii/DS peak for 2 reasons.
1. Maintaining Wii/DS sales peaks is simply impossible. They were going to drop simply due to the nature of the console cycle.
2. Investors are morons. They expected Nintendo would go 100% mobile after the Wii and DS. When that didn't happen, they dropped shares.

The 3DS trouble was simply that after the price cut, Nintendo was actually taking a loss on the hardware. This something they've only ever done once. They took a $9 loss on the GC for the first few months. They will be back to hardware profitability before the quarter is over.

The fiscal year loss. Their first ever in over 120 years in business. This came about because of highly unfavorable exchange rates. 80% of the losses came from the currency exchange because Nintendo holds their assets in US dollars rather than Japanese Yen.

They have an asset balance sheet of $60 billion with $11 billion of it completely liquid. They could take that same loss every single year several decades and not go out of business. Much to the chagrin of Jason up there.

[masteratt]

[...]Nintendo holds their assets in US dollars rather than Japanese Yen.

Why have they done that?

It's bad not only for economical reasons but also isn't it against the way Japan tends to do business; honourably and at home.

[Viper]

Why have they done that?

It's bad not only for economical reasons but also isn't it against the way Japan tends to do business; honourably and at home.

Bad? Consider the fact they went 115 years without ever having a bad fiscal quarter and 120 years before their first bad fiscal year. I've actually looked into it and I've not come across another company of that age that can best that record. Perhaps one exists but I've not been able to find it.

In terms of economic prudence, it's a damn shred policy that's paid off big time. Sure, it can hurt. But it can hurt no different than if they traded in their own currency and it took a major fall against the US Dollar. Consider the inflation rate of the 2 currencies. The Yen is valued against the Dollar at 78.6:1. Granted it was closer to 110:1 last year but if you were to put your assets in a currency, which would you go for? The one with a nasty inflation rate or the one more stable (OK, ignore the past 4 years of US currency devaluation and think long term from the past several decades)?

On the surface, it does sound anti-Japanese but apparently it's not a sin over there to hold assets in a foreign currency. At least I've never heard of any disdain toward them from other Japanese companies for the practice.

[masteratt]

Yeah I was thinking short term in terms of holding in USD = bad. It has been in such shambles, it's hard to remember the good times sometimes.

[Viper]

Nintendo have made $35 billion in profits since 1980 (I don't have records going back any further than that). Prior to the recent loss, their worst year in the modern video game era was $448 million (1990).

With money coming in like that, a few quarters of bad exchange rates are nothing more than an investor relations nuisance.

[frosty]

I believe Sony also uses USD? I know they are affected by the exchange rates much the same.

[Crazybone126]

It's amazing how people always pull out the red flag when it comes to Nintendo. If there's any 1st party video game hardware & software company we need to worry about right now, it's Sony Computer Entertainment. How many CEOs, "top dogs," and salary reductions have they gone through in just 2011-2012 alone? Luckily, SCE has other Sony affiliate divisions to fall back on and pick up the slack because, if they didn't, they'd be on their way out by now. And if they make one more bad business decision, they just might be. Because, from a business standpoint, they aren't doing too hot and haven't been doing so for the past half-decade. They sold PS3 at a loss, it's still yet to turn them a profit, Vita just the same, Move didn't meet expectations, PSPGo was nearly an insult to all tech consumers, they had their entire online network compromised, SixAxis was canned, and why did they even MAKE an Eyetoy3?

People always ask "Will Nintendo make out like Sega" and the answer is simply "no." Sony, on the other hand, getting damn close. Nintendo has plenty of things that have turned them major profits throughout the years to fall back on. They have the Wii, the DS and all of its redesigns, the 3DS which was being sold at a loss at one point but is now no longer, and they may still even have funds from way back in the Gameboy Advance era. Sony, in turn, practically spent all of the earnings they made from PS2 and made the PS3 and look what that's done to them financially. If they don't get their act together by next fiscal year, that's right, next...fiscal...year, you're gonna be seeing some maaajor changes at Sony Computer Entertainment. Major changes. And if they come out of the gate blindly swinging like they did with PS3 for PS4, you can just say goodbye to hardware from SCE altogether which would explain the "PS4 probably won't be that much of a HUGE update from PS3" rumors. But I wouldn't even considerate that a rumor considering someone from Sony ACTUALLY said it. It boggles my mind how shareholders drop their shares from Nintendo, but don't drop from Sony.

[frosty]

Sony is nowhere near close. They made a shitload of profit from their first 2 consoles, and while the losses from PS3 have erased that, it isn't about to shut the company down by any means. Just like how the original Xbox losing 6 billion didn't kill Microsoft's gaming division. No gaming company has ever gone belly up because of one bad console generation. Sega had 2 back to back where they got the shit beat out of them (both times by sony) before they went belly up. Nintendo actually survived 2 shitty generations and went on to release the Wii. Not to mention Sony is a multi-billion dollar corporation that owns half of the entertainment industry, unlike Sega or Nintendo.

That said, after seeing Wii U, Nintendo is about to lose some more money. Lots more. Wii's motion control fad wore out (told you it was a fad, even though that fad lasted longer than I'd ever expected it to), and now it's sales are tanking. Wii U brings nothing new or exclusive to the table, so they have one hell of a hill to climb right now.

[Otacon305]

I'm not saying it's realistic that they'll go down, just saying I want them to. I just hate them so much now, and it hurts, because I used to love them so.

[masteratt]

Well you know what they say: Better to have loved and lost than never to have loved at all.

[Otacon305]

Even better to love and be able to keep on loving because your love didn't take a shit inside your soul.

[masteratt]

Yeah well things involving love rarely have a good ending because when it comes to love, every ending is bad. And everything ends.

[Otacon305]

Maybe with that attitude.

[Segitz]

MS made a loss this quarter for the first time, also... quite a sad state of affairs, really.

[OmniStalgic]

With all the money Nintendo has made in the past few years, you would think Wii-U would be beastly -_- So screw Nintendo for catering to profits first (AGAIN) I don't care how well they do at this point. So I don't care about financials as long as my favorite devs keep making games, and I doubt Sony is in any shape to be headed out of the industry, the company itself is involved with a lot more than videogames, perhaps you'll see downsizing, but Playstation is still a very powerful brand, and PS3 make yet make Sony some money towards the end of it's life, it certainly has a powerful user-base, despite the initial loss for Sony and sluggish sales at the start.

[Viper]

Sony is nowhere near close. They made a shitload of profit from their first 2 consoles, and while the losses from PS3 have erased that, it isn't about to shut the company down by any means. Just like how the original Xbox losing 6 billion didn't kill Microsoft's gaming division. No gaming company has ever gone belly up because of one bad console generation. Sega had 2 back to back where they got the shit beat out of them (both times by sony) before they went belly up. Nintendo actually survived 2 shitty generations and went on to release the Wii. Not to mention Sony is a multi-billion dollar corporation that owns half of the entertainment industry, unlike Sega or Nintendo.

That said, after seeing Wii U, Nintendo is about to lose some more money. Lots more. Wii's motion control fad wore out (told you it was a fad, even though that fad lasted longer than I'd ever expected it to), and now it's sales are tanking. Wii U brings nothing new or exclusive to the table, so they have one hell of a hill to climb right now.

Sega only had 1 bad generation. I know the sales of the Saturn itself were bad but it was profitable. Just like the GC for Nintendo. Low sales but very profitable.
From 1994-1998, Sega made $1.4 billion in operating profit. And would have been higher but the launch costs of the Dreamcast in 1998 brought it down. The Dreamcast itself actually didn't start losing money until 2000 so even it had profits the first 2 years. When Sega went 3rd party, they were still $1.7 billion positive over the life span of Genesis and up (1989 - 2001).

Sony has erased everything they gained from the PS and PS2 days. They are now $1.59 billion in the red. However, this does included profits and losses from other consumer products since they keep shifting the department they include PS sales in. First they had an actual Games division, then they moved it to the Network Products & Services division and now finally the Consumer Products & Services division making it impossible to tell how much a loss or profit is attributable to the PS family.

And how do you get that Nintendo will lose money on Wii U? If they sell it for a profit per console...well, you tend to get profits. Are you forgetting the N64 and GC?
The fad comment...seriously? Not only did it last the entirely of the consoel generation, not only was the Wii the best selling console of the generation, but your own console maker threw in a complete rip off and MS is fucking ga ga over gesture controls. I suppose when the PS finally stopped selling that it meant it was just a fad too, right?

[Crazybone126]

Sega only had 1 bad generation. I know the sales of the Saturn itself were bad but it was profitable. Just like the GC for Nintendo. Low sales but very profitable.
From 1994-1998, Sega made $1.4 billion in operating profit. And would have been higher but the launch costs of the Dreamcast in 1998 brought it down. The Dreamcast itself actually didn't start losing money until 2000 so even it had profits the first 2 years. When Sega went 3rd party, they were still $1.7 billion positive over the life span of Genesis and up (1989 - 2001).

Sony has erased everything they gained from the PS and PS2 days. They are now $1.59 billion in the red. However, this does included profits and losses from other consumer products since they keep shifting the department they include PS sales in. First they had an actual Games division, then they moved it to the Network Products & Services division and now finally the Consumer Products & Services division making it impossible to tell how much a loss or profit is attributable to the PS family.

And how do you get that Nintendo will lose money on Wii U? If they sell it for a profit per console...well, you tend to get profits. Are you forgetting the N64 and GC?
The fad comment...seriously? Not only did it last the entirely of the consoel generation, not only was the Wii the best selling console of the generation, but your own console maker threw in a complete rip off and MS is fucking ga ga over gesture controls. I suppose when the PS finally stopped selling that it meant it was just a fad too, right?

And that's an extremely dirty business practice. Highly dishonest and shows they're just trying to cover the butts.