When Microsoft and Sony starting are starting to break even on their consoles, I highly doubt that production costs have risen, especially outdated technology found in both DS and the Wii.
Nintendo is king on gaining huge profit margins on their hardware, even on the launch year.
I hope everyone loaded up this week, cause this thing is going to 100$.
"...lower component prices"
I'm a BIG Nintendo long - so don't get me wrong...
But the cost of virtually EVERYTHING has been skyrocketing...
I think Nintendo is HUGELY undervalued and will destroy this quarter's estimates, but - if anything - their production costs have probably risen....
I think any estimate that has earnings being flat is totally insane. Nintendo can sell as many Wiis as it wants and the mroe Wiis and DSs it sells, the more money it makes on the software.
I expect Nintendo to lowball guidance for next year but still show decent growth.
If you accept they had revenue of $18B USD last year, and earnings work out to be about $3.8B USD, with a market cap of $74B USD the P/E works out to be around 20. Depending on how earnings are estimated, the current P/E could be from 17 to 25.
If you think the earnings will double again in 2009, the forward P/E works out to be 10. Many estimates put the earnings to be flat for next year.
The high yield will help discourage short sellers.