Nintendo Stock Split Not Expected Until 2009

Jul. 3.07 | About: Nintendo Co., (NTDOY)

Nintendo's (JP: 7974) (OTCPK:NTDOY) annual shareholder meeting was last Thursday. The big question on everyone's mind was whether Nintendo has plans to split its shares, or at least lower its 100 share minimum trading unit.

Unfortunately for retail investors, there will not be a share split and/or reduced trading unit, until the second-half of 2009, at the earliest.

Without using a special non-round lot purchase system ("mini-kabu"), investors currently must pay 4.67 million yen (approx. $38,000) to buy 100 shares.

A securities law enacted in 2004, established June 2009 as a target for ending the printing and use of physical stock certificates and instead switching to "paperless" or "electronic" securities.

An explanation was provided at Nintendo's meeting and in a press release in Japanese, focusing more so on the reduced trading unit measure, but effectively saying the company cannot take any action until June 2009, citing the "paperless" requirement and high financial costs related to adopting measures prior to 2009.

Nintendo did say it recognizes the urgency of the problem related to its stock's trading unit and said it plans to begin reviewing the matter from January '09.

Separately, a shareholder asked about expanding DS and Wii sales to China and India. The Kabushiki Digest reports the response given was, it is not a simple matter due to concerns over China's protection of intellectual property. Furthermore, it is hard to consider such expansions at present, because Nintendo is still trying to meet demand domestically, in the U.S. and in the EU. However, Nintendo said it will review the matter once it has resolved its supply system.

Despite the impossibility of a share split and/or reduced trading unit, Nintendo's shares continue to climb to new highs, gaining 2.1% to ¥46,700 ($47.69 ADR equiv. at ¥122.4/$1) Tuesday. Its ADRs rose 3.4% to $47.40 Monday.

Leading Japanese video game magazine publisher Enterbrain, reported the Wii outsold Sony's PlayStation 3 six-to-one in June in Japan. What was overlooked was the fact Nintendo's [Wii] sequential sales rose 7.6%, while Sony's [PS3] fell 8.1%, per Enterbrain's survey.

Further reading: Nintendo Market Cap Rises Above Sony'sAnalysts More Bullish Than Ever on NintendoJapanese Exporters Look Poised to Profit from Weak Yen

Nintendo (JP: 7974) one-year chart as of 07/02 close:

Nintendo-JP7974-chart-07-02-07

Disclosure: The author does not own shares of any companies mentioned in this article.