Nintendo shares hit 7-month low on recession fears
by Kyle Orland 
{ Feb 6th 2008 at 3:05PM }
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 -- the company is still more profitable than a solid-gold hippopotamus that periodically spits out smaller golden hippopatami. 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? We'll see, but in the meantime we'd recommend stuffing your mattress with small bills and loading up on canned goods. You know, just in case.
Reader Comments (Page 1 of 1)
Shimrra @ Feb 6th 2008 3:12PM
Well Nintendo stop being so greedy and start mass producing your system so everyone can buy it. Soon or later people are just going to not care anymore that Wii is out. People are looking at 360 and PS3 now.
vidGuy @ Feb 6th 2008 3:26PM
Wii's are being mass produced faster than XBOX360 or PS3. Demand is still greater than supply, unlike the other consoles. What's your point?
Fernando Rocker @ Feb 6th 2008 3:53PM
Mass producing? They are producing 1.8 millions Wiis every month, and every month Nintendo sells 1.8 millions Wii...
Nintendo's growth is only restrained because they can't make more than 1.8 millions because they are producing at full capacity.
But the Wii production will increase in April: http://www.gamer.tm/news.php?id=2010&filtr=wii
itouchmyself @ Feb 6th 2008 4:09PM
Thats funny Fernando because a lot of online retailers are reading nintendo wii's as "IN-STOCK". So where do you get your data?
Fernando Rocker @ Feb 6th 2008 4:13PM
Show the links
Vidikron (FU) @ Feb 6th 2008 4:17PM
Didn't Nintendo mysteriously sell more during the holidays though? I thought that basically confirmed that Nintendo does indeed hold back stock.
Fernando Rocker @ Feb 6th 2008 4:21PM
If you follow the charts, you see that prior the holidays, Nintendo was selling less than the 1.8 millions at month... even the PS3 outsell the Wii for several weeks in Japan, and in USA the sales were on par with the 360, because Nintendo was holding suply for the holidays.
But they were holding suplies months before... they not icreased production Vidikron
itouchmyself @ Feb 6th 2008 4:26PM
So why would a company thats producing as many wii's as it sells, hold backstock? Maybe to exaggerate the demand? Simple business tactics.
vidGuy @ Feb 6th 2008 4:46PM
To control its allocation in various markets? To redistribute the product where it will sell fastest? To limit the number of times stores have to announce that Wiis are in stock? To ensure that the longest lines get the most Wiis? To get the largest number of consumers into stores buying related products?
I understand this argument, and it is certainly helpful to have your product look like the hottest, hardest-to-get good of the season. But a lack of supply does not create additional demand. Period.
Fernando Rocker @ Feb 6th 2008 4:56PM
Vidguy...
Your Friend Code? I want some Joystiq friends to play SSBB and Mario Kart =)
6140-3530-5783-6618
itouchmyself @ Feb 6th 2008 4:59PM
But yet, since the demand was "so high" they could have sold them all regardless of where they released them and what time they released them. Also Nintendo went one year, 1 full year without changing its manufacturing process of trying to get more Wii's to buyers. Knowing that, your theory has no ground.
Koopaknight29 - (Nintendo Loyalist) @ Feb 6th 2008 5:17PM
They probably held stock for the holiday season to better match the increased demand of said season. I have no doubt it probably would have looked bad on their report if there was no visible increase in sales during that time, regardless of how much was actually sold. Its all a matter of relativity and good public image.
Besides, Nintendo didn't want any riots during Christmas. Consumers get really scary during the Christmas crunch...
::shiver::
vidGuy @ Feb 6th 2008 5:18PM
You're looking at only the number of sales, not all of the other factors involved. Yes, they could have sold their supply anywhere. But is it better to get a trickle of consoles to stores whenever, or a huge load right at the holidays? It's better to satisfy, say, 100 customers than to continuously frustrate them when only 20 consoles come in to a store. What's cheaper, sending five trucks to carry 20 consoles at a time or one truck to carry one hundred? There's a transportation cost involved, too. If a Wii sits on a shelf in Idaho for a week before Black Friday, wouldn't you rather save it for shipment right before Black Friday (saving inventory costs) or ship it to Iowa where it would be sold in seconds?
Yes, Nintendo has gone a long time without upping manufacturing capacity. Can't blame them though, it's the smart financial move. Extra capacity costs tons of up-front capital; the extra capacity isn't likely to be needed for long. So why spend more money than you are going to get in return? Nintendo's profitable BECAUSE it doesn't make stupid mistakes like that.
Fernando, I'm not a big Wii online gamer; I find it incredibly frustrating that the dozen wireless signals in my range cause it to drop constantly. I've thought about plugging in but don't have the cash for that expensive USB-Cat5 adapter.
Fernando Rocker @ Feb 6th 2008 5:27PM
vidGuy
Official first party adapter at Best Buy, just $24.99
http://www.bestbuy.com/site/olspage.jsp?skuId=8193466&st=wii+lan&lp=1&type=product&cp=1&id=1164157285316
=)
Curtis @ Feb 6th 2008 6:37PM
@itouchmyself
The fact that you claim "a lot of online retailers are reading nintendo wii's as "IN-STOCK"" shows that anything you say has no ground. So where do you get your data?
bm @ Feb 7th 2008 3:46AM
"I find it incredibly frustrating that the dozen wireless signals in my range cause it to drop constantly. "
Shit like this is why I'll -always- stick to wired where ever possible.
Admiral_Mike @ Feb 6th 2008 3:12PM
Why is nintendo being singled out here? Surely sony and other companies would be having similar problems.
Viridium @ Feb 6th 2008 3:17PM
Yup, all the markets and most stocks are down, even those that are still outperforming in their sector. Nintendo's nothing special. I don't understand the point of this article (sorry, blog post), other than to point out the blindingly patently obvious. Congratulations Kyle, you've earned the stamp of "No shit".
itouchmyself @ Feb 6th 2008 4:03PM
Yup but unlike Nintendo, Sony sells electronics and Microsoft sells software. *lightbulb*
Killer Loki @ Feb 6th 2008 4:06PM
Cause Nintendo has replaced MS & Sony as the 'evil empire' No one likes a smart ass.
Viridium @ Feb 6th 2008 4:25PM
Loki, better a smartass than a dumbass...
GenoBoost @ Feb 6th 2008 3:13PM
"the company is still more profitable than a solid-gold hippopotamus that periodically spits out smaller golden hippopatami."
Best analogy I have ever heard.
Farseer (GDI) @ Feb 6th 2008 3:40PM
Ditto.
Very nice.
RoboChamp @ Feb 6th 2008 3:15PM
Alright, I'll bite. I'm going to claim ignorance on the severity of this recession thing, but could it essentially become the hit sequel to the Great Depression?
Joe Winders @ Feb 6th 2008 3:21PM
Short answer: Yes.
But it isn't there yet, and it may never get there. But the problems in the finance sector are serious. Don't put all your money in the same bank.
Grog @ Feb 6th 2008 3:25PM
We aren't even in a recession yet. You have to have 2 straight quarters of negative growth and we haven't even had one. All that's happening is that the economy is slowing down, i.e. not growing as fast.
vidGuy @ Feb 6th 2008 3:28PM
No. We're definitely hitting hard times and things aren't going to be fixed for many years, but a depression it will not be. This is the natural cycle, we are just feeling it stronger because of the price of oil, which causes less investment among myriad other negative consequences. Less investment contributes to slow down. Slow down causes households to save more, which slows the economy further.
vidGuy @ Feb 6th 2008 3:35PM
Also, anyone who uses GDP as an accurate measure of our economic stability doesn't know his economics very well. GDP won't tell us much about our status in a recession or depression.
Mr Khan @ Feb 6th 2008 4:20PM
A stock market crash of the proportions of the 1929 crash is theoretically possible, but much less likely because of new rules about things like Buying on Margin, which was like taking out a home loan on stock, which meant that stock was bought with no real $ to back it up
Plus, the FDIC will prevent a depression of that magnitude, since the crash brought about the mass bank failure which meant that all savings were suddenly void in a lot of cases
I don't know much about economics, but it seems to me that it would be next to impossible to emulate the Great Depression now
Joe Winders @ Feb 6th 2008 3:16PM
Part of this a bubble in Nintendo stock that is now coming undone.. Other companies like Apple & Google are also seeing big drops now.
Video games will take a hit in a serious US recession; there is no way around that. Gamestop might do well though, with the used videogame angle.
Nigeria @ Feb 6th 2008 3:19PM
It looks like the American recession is going to drag the whole world with it down the drain.
On the plus side, importing DVDs has never been cheaper for someone using the Euro/Pound. For now.
vidGuy @ Feb 6th 2008 3:33PM
There's many benefits of globalization. This is one of its downfalls. If China tanks, the rest of the world would be feeling it, too. If OPEC shuts off its oil supply to the US, we're all screwed.
If there's any time to get rid of prejudice towards America or another country, it's when you realize your livelihood largely depends on it.
Nigeria @ Feb 6th 2008 4:31PM
There was no prejudice in my statement. And there was defiantly no hostility. If you saw any then maybe you were looking it.
And considering my background, I am clearly aware of how events in a single location can reverberate for the better, and worse, all around the world. The Niger-delta region is one example of that.
vidGuy @ Feb 6th 2008 4:41PM
As there was no prejudice or hurt intended in mine. I was speaking generally. Your post brought up a good point that I wanted to elaborate on. Sorry that text didn't help get that across.
Marty @ Feb 6th 2008 3:36PM
So now that Nintendo stocks are at a low point, should I go out and buy before they release SBB in the states?
billychaos @ Feb 6th 2008 3:42PM
As soon as I started reading this, I started to think...um this is not a Nintendo issue. It's the entire stock market issue.
We have been showing signs for a while of heading toward a recession. If this happens, Video games are the last thing anyone will care about.
GRANTED @ Feb 6th 2008 4:04PM
thats a LIE... i will care about video games as long as there is electricity running through my cardboard box.
itouchmyself @ Feb 6th 2008 4:01PM
I wouldnt expect the wii to continue its sell trend considering that the people who bought a wii, are perfectly content with wii sports. Why just yesterday my co-worker (a female) explained to me that she was getting a wii, and I said oh yea, what games? She said "games?, I thought there was only bowling and Tennis". Yea Nintendo , you picked yourself up some loyal customers.
On a side note, If you own stock in Nintendo
SELL! SELL! SELL!
umm....hello??? @ Feb 6th 2008 4:06PM
you're retarded. if you haven't sold your NTDOY stock by Nov/Dec 2007 when the price was around $78/share, now is the time to BUY BUY BUY!!! the whole reason the share prices drop is because people are selling. the stock market will eventually rebound.
I paid $18.12/share back in 2000/2001, and will be picking up some more shares this week.
itouchmyself @ Feb 6th 2008 4:11PM
Obviously being sarcastic, why would you sell Nintendo stock now? It would be pointless as profits are at their highest. You're the retard for selling, good sir.
Abuzar @ Feb 6th 2008 9:57PM
He is not selling dumbfuck. He just said he is gonna buy some stock this week.
copres @ Feb 7th 2008 12:52PM
"Yea Nintendo , you picked yourself up some loyal customers"
i believe that you are confused. it goes the other way around.
companies dont "pick" customers, customers are the ones that "pick" companies
umm....hello??? @ Feb 6th 2008 4:02PM
@Admiral_Mike-
Nintendo is being singled out because Nintendo is a VIDEO GAME COMPANY. Sony and Microsoft are VERY diversified companies (software, hardware, computer, cell phone, other electronics) so Nintendo (theoretically) will be hurt the most.
@Marty
of course buy now!! always buy low sell high. not sure how old you are but stocks should be viewed as a longterm investment (unless you're a daytrader). it's not like Nintendo is going to go bankrupt with the cashpile they're sitting on. there's also a lot of nasdaq/dow stocks you can get in on for a premium while they're down. also a good time to contribute to your IRA account while the markets are down.
Fernando Rocker @ Feb 6th 2008 4:09PM
Question... do you know something about stocks? If you do, can you give me some orientation?
itouchmyself @ Feb 6th 2008 4:13PM
Unless youve got about 2-10k to throw around, dont even bother.
Fernando Rocker @ Feb 6th 2008 4:14PM
I can start with only 1k
itouchmyself @ Feb 6th 2008 4:19PM
Us citizenship, 18 years or older. Some credit wouldn't hurt either. Some collateral. Another Financial Institution. Source of Income.
Scooby Doo @ Feb 6th 2008 5:20PM
Don't let itouchmyself tell you that's not a good starting point. Anything is a good starting point, Fernando. However with about 1k it will be hard for you to follow a very important rule: diversify. It basically means to not put all your eggs in one basket. I would recommend you start looking at mutual funds as a way to get started with that kind of capital.
Rather than give you specific advice (and try not to listen to anyone in particular), I would recommend checking out the Wall St. Journal's Guide to Money and Investing. It's a very easy read (about 30-60 minutes) and will help you learn some of the basic concepts of this market. You want to be an INFORMED investor and understand some of the basic concepts before jumping in with both feet.
Fernando Rocker @ Feb 6th 2008 5:37PM
Thanks for the tip Scooby. =)
vidGuy @ Feb 6th 2008 5:51PM
Remember that "diversify" means to truly invest in different companies/funds in different markets. Be in high risk and low risk, tech firms and Blue Chip companies, fast growers and steady climbers. Don't be talked into buying a stock when it's hot unless you really think it's going to keep flying up. Google was a good buy even at $150/share, but only if you sell above that; chances are that it's inflated (PE ratio doesn't look good) and will crash eventually. Don't move your funds around too much, as trades more frequent than bi-monthly usually result in losses. Don't get sucked into buying on some "hot" info that "the rest of the market doesn't know"; by the time that news reaches you, it has already been figured into the stock price. The only way to daytrade is to really be on the market floor.
I agree with Scooby though, the only way to invest is to be informed. Fortunately for the informed, the majority of the market is ill-informed.