Nintendo stock falls after Japanese gov sells its shares

by Blake Snow { Feb 26th 2007 at 12:05PM }

A little video game biz news making the rounds this morning: NY Time's DealBook reports of a Nintendo stock price decline on news that the Japanese government would sell its shares.

"Shares of Nintendo, the world's largest maker of handheld video-game players, posted the biggest decline in three weeks after the company said Japan's government would sell its stake, about 1.4 percent of the outstanding stock. The stock fell 2.7 percent to 32,950 yen on the Osaka Securities Exchange on Monday."

The total value of the released shares is around $557 million. So is Nippon short on cash or does the country know something we don't? Like, Nintendon't?

UPDATE: As commenter sheppy wisely points out, Nintendo requested the sale "to increase the number of individual shareholders" according to Bloomberg.

Reader Comments (Page 1 of 1)

sheppy @ Feb 26th 2007 12:08PM

Good reporting....

Nintendo requested the government sell their stocks. Apparently to make more stock open towards the trading public. There is also potential worries that Nintendos stock prices, if they remain so high, they would becme untradable for the casual investor and slow but steady growth could hurt the company in the long run.

Crono @ Feb 26th 2007 12:20PM

You know that for sure Sheppy, or are you just speculating?

I'm inclined to agree with you, but I'd like to know if its just conjecture or not.

John Weber @ Feb 26th 2007 12:25PM

"Nintendo initiated the sales by approaching the corporation, Ken Toyoda, the company's spokesman said by telephone. The company is looking to increase the number of individual shareholders to increase liquidity, as products such as its DS handheld player and Wii consoles spur interest in its stock."
http://www.bloomberg.com/apps/news?pid=20601101&sid=auWfv3BlI.sI&refer=japan

Avinash_Tyagi @ Feb 26th 2007 12:25PM

Its right there in the bloomberg article

"Nintendo initiated the sales by approaching the corporation, Ken Toyoda, the company's spokesman said by telephone. The company is looking to increase the number of individual shareholders to increase liquidity, as products such as its DS handheld player and Wii consoles spur interest in its stock.

``The news suggest a worsening of share supply and demand, and comes at the time of concern that the stock's price is high,'' said Yoku Ihara, head of equity research at Retela Crea Securities Co. in Tokyo."

Efren @ Feb 26th 2007 12:26PM

You know sheppy, when stock reaches the point youre describing, companies tend to split their stock, not ask people to sell it.

Liqwid @ Feb 26th 2007 12:28PM

Money money money.... mooonayy!

Yea, I've been wanting to buy some of Nintendo Stock for a long time, but it's so damned expensive. It'd be great if it falls to a more reasonable price.

sheppy @ Feb 26th 2007 12:28PM

http://www.gamasutra.com/php-bin/news_index.php?story=12893

"Nintendo officials asked that the company’s shares be released in order to increase the number of individual shareholders and to increase liquidity. The success of the Nintendo DS, and more recently the Wii, has seen the company’s stock rise by 43 percent in the last six months, compared to a 14 percent average in the benchmark Topix index."

And there we go.

sheppy @ Feb 26th 2007 12:32PM

"You know sheppy, when stock reaches the point youre describing, companies tend to split their stock, not ask people to sell it."

Normally, yes. But you forget the Japanese school of econmy reform. The same one used by Bush today. Simply outspend a debt. The government purchased the stock in order to add stability to the stock market. After all, a huge purchase obviously indicates an upward trend. Since this motive was no longer needed (since Japans economy is on a rebound but still not quite as strong as once it was), the massive amount of stock held by the government started damaging Nintendos position. So Nintendo intends to take the initial dip to provide a stronger trend later down the road.

Erwos @ Feb 26th 2007 12:34PM

Sheppy's comments make no sense. Nintendo could have done a stock split to lower the price, and issued new shares on their own (which would have also lowered the price). Either of these would probably have been more beneficial than the government dumping their stake.

sheppy @ Feb 26th 2007 12:39PM

I didn't say the logic made sense. I just said what happened. Nintendo requested the government to dump the stock and they did. Period, end of story.

S @ Feb 26th 2007 12:43PM

@9

RTA. Don't armchair analyze. There is a reason professionals are professionals. It's because they have other ways of dealing with situations than what's commonly known.

Sometimes not splitting stock is the best long term solution. Supply and demand.

Brian @ Feb 26th 2007 12:45PM

I didn't realize we had so many stock brokers on this site. Nintendo clearly stated their reasons for the move. If you don't understand why they'd do it, then there's probably something you're missing. There are too many people involved in this decision who make their entire lives 'about' stock, for "oh man, we forgot that we could just split the damn thing!" to sound plausible.

S @ Feb 26th 2007 12:46PM

Oh and they didn't ask "people", they asked the gov't which suggests that the gov't bought it initially as assistance to them in the first place.

Call me when they ask their general shareholder to call it quits in the midst of soaring stock prices.

LaughingTarget @ Feb 26th 2007 12:46PM

Sheppy is right.

Also, stock splits are actually quite expensive. They require registering with markets and recalculating of books. This is a dirt cheap way for Nintendo to get their stock price back to a reasonable level.

MrBlank @ Feb 26th 2007 12:52PM

I think the real question is: "Where can I watch that Sega commercial?"

Brian @ Feb 26th 2007 12:58PM

umm youtube?

http://www.youtube.com/watch?v=k7nsBoqJ6s8

Erwos @ Feb 26th 2007 1:00PM

"RTA. Don't armchair analyze. There is a reason professionals are professionals. It's because they have other ways of dealing with situations than what's commonly known."

This may surprise you, but I have a degree in economics with heavy emphasis in banking and finance. I'm not a professional, but I'm not exactly an idiot newb, either.

That said, I suspect there's more to this story than we're being told.

mj @ Feb 26th 2007 1:40PM

They needed the money to buy a ps3! HAHAHAHA...

Seriously, don't be stupid. They bought shares to block a foreign purchase of Nintendo (MS) when it wasn't doing well. Now there's no reason for the assistance.

t_m @ Feb 26th 2007 1:51PM

looks at vista sales.. looks at wii sales... blinks.. waits for nintendo to buy microsoft...

S @ Feb 26th 2007 4:41PM

There really is nothing to see here.

A good portion of stock value comes from transactions that take place (Obviously company performance counts too). If I can push an assload of stock to someone above the current pricing on the basis of future valuation then the average price goes up and it's basically a self fulfilling prophecy.

Everyone benefits. Having big chunks of stock that will not move because it's held by one entity is like not being publicly held in the first place. Thus the term "fluidity" and why they'd ask the gov't to part ways with their share. The gov't probably bought in solely to stabilize a creaky market and now that they have all of this current success, releasing the shares to the public again will in fact drive prices up long term.

Hope this helps. @Erwos Sorry if I came off harsh, I just felt that anyone who knew anything about finance would see that it's a reasonable even if not the "common" solution.

I'm hoping it prevents fanboys from spelling out disaster on Nintendo's end.

ss @ Feb 26th 2007 6:25PM

t_m, not only Vista sales outnumber Wii sales, but Nintendo needs to sell one Wii and more than 5 games to profit as much as MS does from one Vista sale.

Mr Khan @ Feb 26th 2007 6:38PM

When was MS ever considering buying Nintendo?

I think people just like saying MS is considering buying gigantic company X (insert Capcom, Sega, or Nintendo, or whatever)

idioteraser @ Feb 26th 2007 7:55PM

22. Ah Dean Takashi in his book about the development of the xbox 360 confirmed that Microsoft did try to buy Nintendo.

Microsoft originally wasn't going to push out the xbox. Instead they wanted to buy Nintendo have their R and D design with guidance by Microsoft. This would also have the effect of having all the Nintendo software development teams you know the ones that make Nintendo number two software publishing company in the world in profits putting out games on the Microsoft branded console.

Microsoft offered 30 Billion dollars which Nintendo laughed at since Nintendo is a 40 Billion dollar company.

It is incredibly expensive to start a home console. Most companies went bellyup. SEGA was constally in the red on the verge of bankrupty or was bankrupt for years at a time. This despite getting 50% of the home console market during the SNES era.

People keep saying Nintendo lost with the gamecube but Microsoft was four billion dollars in the hole while Nintendo made a profit on the gamecube.

If determing profit is a winner then Nintendo won while the xbox lost.

NintendoFanbot @ Feb 26th 2007 10:04PM

NTDOY used to be $7, but now it's $34!

*SOB*

Nintendo regularly buys back shares to add to their own financial muscle but I agree with Sheppy's thoughts as well. If they get to high they'd be untradable as well.

Maximus @ Feb 27th 2007 3:07AM

23...Actually between the N64 and the GameCube being failures Nintendo barely broke even. The only thing that kept their heads above water was the GameBoy and the DS.
That's why the Wii is so cheap, they couldn't afford to go hi-def or DVD interchangable. Shigero Miyamoto said so himself in early 2006, that if he had it his way the Wii would have been hi def ready. Nintendorks won't listen to reality, that's why history will repeat itself and it will come in dead last...AGAIN.

*Fuck Nintendo