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What does Nintendo do with all its money?
Wii U sales might still be a disaster but the opening of the Chinese market has boosted Nintendo’s market value back ahead of Sony.
According to the business markets Nintendo now has a market value higher than all of Sony combined, as Nintendo’s stock has more than doubled over the last few months.
The situation seems bizarre given how poorly the Wii U continues to do but a disappointing earnings report from Sony in November has seen its market capitalisation (the total value of all its shares) fall to $17.7 billion.
Nintendo on the other hand has been surprisingly popular with investors over the last few months, with stock prices on the rise and a market capitalisation that now stands at $18.4 billion.
That doesn’t necessary mean Nintendo has more money than Sony (although they are a notorious hoarder) but it is proof that the wider business world does not see things in the same way as most gamers.
The reasons for Sony’s fall and Nintendo’s rise are typical opaque, but most recently the under-performance of several Sony movies (including Will Smith’s After Earth) and problems at the company’s music and laptop divisions have been the main problem.
Sony’s PlayStation business has been doing extremely well, but it’s offset by the company’s other struggling businesses.
The reasons Nintendo is back in favour is partially due to the relative success of the 3DS but also investor rumours that the company will shortly announce significant changes to its business model. Many investors are convinced Nintendo will begin to support smart devices, despite Nintendo repeatedly telling them that they would never dream of it.
That means Nintendo’s stock could be in trouble at its next earnings report, especially as the Wii U is expected to have under-performed yet again. However, the company’s share price has also had a recent boost from the announcement that China will lift its ban on home consoles.
Nintendo has been trying to make inroads into the Chinese market for years and its share price rose by 11 per cent as soon as the lifting of the ban was announced.
All of this is still a long way from the peak of the Wii’s popularity though, when in 2007 Nintendo was valued as the third biggest company in Japan. A fact that it singularly failed to make the most of, given its current state.
For comparisons sake though Activision Blizzard remains the biggest third party publish with a value of $12.7 billion, with EA second on $7.1 billion. Which really does make you wonder why it’s EA treating Nintendo like dirt and not the other way around.
Leagues ahead of everyone though is Microsoft, with a market value of $304.0 billion, although as with Sony that includes all of their businesses and not just their games division.
In fact persistent rumours suggest that Microsoft is considering spinning off or even selling its Xbox business, although again that seems to be more investor wishful-thinking than a result of anything Microsoft has ever said
Yes Nintendo is doomed since 1983.
