This is the most frustrating stock. The Dow and Nikkei up and this stock with incredible earnings and future is slowly sliding downhill. I would like anyone with more savvy than I to please give some insight into Nintendo performance. I would think this has to be the bottom and that it will eventually rise (probably on bad news), but right now its performance is baffling.
I agree the price AND the performance are baffling. This is one of the most successful, cash rich companies in the world and it's selling for what it did before the Wii was a confirmed world wide success.
Here are some reasons why I think this is happening:
a) People are still convinced the Wii is a fad even though it's the fastest selling console of all time. This has been reinforced by the CEO's comments about slowing sales in Japan and I believe it has led to worries about slowing sales in other parts of the world. I don't think this is going to happen. And I think that the introduction of the enhanced Wii remote along with another Wii Sports (Resort) could bring sharp suprises in the quarters ahead.
b) Revenue and profit growth have slowed which has certainly hurt the stocks' momentum. As I said above, I think the new Wiimote and new games will start to accelerate profit growth again.
c) I do blame management for being too conservative and perhaps not hedging their exposure to the yen when they had a chance. But Japanese companies look at things in terms of decades not quarters which is why Nintendo is still around while the trash heap is full of American videogame companies.
I almost look at Nintendo as abond paying over 5% at this point. We could see further weakness but I think that would be a buying opportunity.
It can't stay stuck forever. My guess is that it moves up based on the DSi and the continued Wii sales to non-traditional gamers. I don't think the strength of the Wii will show up until the holiday season.