Posted by: Matt Vella on February 06
Call it the hard bigotry of high expectations. Nintendo (NTDOY) may be coming off a blockbuster 2007 when Wii units and DS portables blew off store shelves, but that hasn’t stopped the Japanese game-maker’s stock from hitting a seven month low. The company’s stock fell 5.9% today, as Japanese exporters brace themselves for a possible recession States-side. Akio Yoshino, chief economist at Societe Generale (SOGN), told Bloomberg today, “There’s an increasing chance that the US will post negative growth in the first quarter, and that’s tough news for cyclical markets like Japan.”
Setting those very real concerns of global economic slowdown aside for a moment, it may be the time to ask if the extent of today’s slide has any implications for the high-high expectations that the company’s 07 performance may be creating and if the stock is in for even tougher times ahead as the U.S. market for console hardware cools in 2008. (Yes, it’ll grow but at a slower rate.)
So, could NTDOY be the next AAPL? The normally tony Apple stock has been hammered recently, despite the steroidal growth in just about everything the Cupertino, California electronics manufacturer has its hands in. (More on that here.) For its part, Nintendo last month revealed that the company’s profits for the previous nine months were double the same period a year earlier. Full year results, which aren’t’ likely to disappoint, are due shortly. After all, year-end NPD figures showed that, in 2007, Nintendo sold 6.29 million Wii units to Microsoft’s (MSFT) 4.62 million Xbox 360s and Sony’s (SNE) 2.56 million PlayStation 3s. And, in an interview with Gamespot.com, Satoru Iwata, the company’s president and CEO since 2002, revealed for the first time that it had sold some 10 million virtual console games to boot.
In other words: record profits, record volume, and – yes – even higher expectations. We’ll have to watch the stock ticker to find out what happens next.
No longer child's play, the booming global games market is worth billions of dollars. In Games, Inc., BusinessWeek Innovation writer Matt Vella and Tokyo correspondent Kenji Hall analyze emerging business trends in video games and interactive entertainment. They’ll examine everything from button-mashing, chart-topping, console games to serious games commissioned by big corporations to train staff. They’ll also map the evolution of expansive virtual worlds and go behind the strategies at companies that are turning play into big business.