Nintendo Shares About To Catch Fire With Nintendo WiiU Launch

| About: Nintendo Co., (NTDOY)

Click to enlarge

The holiday season of 2012 could be one of the biggest and most important in Nintendo's history. Nintendo (OTCPK:NTDOY) trades in the United States on the OTC Markets. Shares are down 12% for the calendar year of 2012 and down over 75% from highs seen around the launch of the Nintendo Wii. Will a new version called the WiiU bring Nintendo shares back to new highs entering the holiday season of 2012?

Nintendo will launch its new console ahead of Sony (NYSE:SNE) and Microsoft (NASDAQ:MSFT), who both have new consoles coming to replace the Playstation 3 and XBOX 360 respectively. In the United States, the console will begin selling on November 18th. This sets up for a strong holiday season for Nintendo and could also lead to retailers like Gamestop (NYSE:GME) seeing strong console sales as well. The basic version will be white and retail for $300. This basic version comes complete with a console, gamepad, and 8GB. The deluxe version, which will retail for $350, will come with 32GB, a console, gamepad, and the Nintendo Land game. Deluxe version consoles will be black.

Customers who purchase the Nintendo WiiU will get Nintendo TVii at no additional cost. This new television streaming from Nintendo will include partnerships with Hulu, Netflix (NASDAQ:NFLX), and Amazon (NASDAQ:AMZN) Video.

Early pricing was released for the Nintendo WiiU console. In the United Kingdom, the console will be released on November 30th. The starting price on Amazon and Tesco will be two hundred and fifty pounds for the basic and three hundred pounds for the deluxe. Not to be outdone, United Kingdom online retailer Shopto will sell the basic version for two hundred and forty eight pounds, and two hundred and ninety seven pounds for the deluxe. The WiiU console will not be released in Japan until December 8th.

The Nintendo Wii was once the largest gaming console in the world. The console saw its market share fall over the years as hardcore gamers chose the XBOX 360 and Playstation 3. Motion sensor technologies from Sony's Move and Microsoft's Kinect also saw less gamers choosing the Nintendo Wii console. Here is a look at how market share shifted over the last four years (from VGChartz):

2009 2010 2011 2012 (YTD)
Nintendo Wii 48% 39% 31% 22%
Playstation 3 27% 33% 38% 44%
XBOX 360 25% 28% 31% 34%
Click to enlarge

In 2012, 2.85 million Nintendo Wiis have been sold. This is lower than the XBOX 360 (4.37 million) and the Playstation 3 (5.69 million) by a significant margin. In 2011, the Wii had a much closer position compared to sales for its two rivals. Last year, 5.55 million Wiis were purchased, compared to 6.75 million PS3s and 5.60 million XBOX 360s. Nintendo has also lost market share in its normally strong handheld console segment. The DS and 3DS have been hurt by the PSP and PS Vita, from Sony.

The Nintendo WiiU was unveiled at the Electronic Entertainment Expo of 2011 on June 7th. Commonly referred to as the E3, the expo normally is a place for companies to show off new products. Nintendo took the front stage to show off its new console and was one of the most talked about topics of the event. Surprisingly, shares dropped over 10% after the console was announced.

An article on shows how analysts see the launch of the Nintendo WiiU going:

  • Wedbush Securities thinks the console will sell well through the holiday and could hit 7 million sold by March, but also warns that the company might have to cut the price before the 2013 holiday season to compete with Sony and Microsoft's new releases.
  • DFC Intelligence thinks the price is a little too high to start with, and sees a price drop coming before the console is twelve months old.
  • Sterne Agee was impressed with the WiiU's initial lineup, and thinks the console could sell one million units in North America over the holiday season, which would be in line with the original Wii console in 2006.
  • EEDAR was not surprised with the initial price for the console, but is surprised at a lack of depth in the game lineup.
  • RW Baird thinks that the company and console could have a strong holiday, but notes the console is not a "killer".
  • The Nintendo Wii console will be powered by an IBM (NYSE:IBM) Power 7 Multi-Core Processor. This is the same processor that was notably used in Watson, the supercomputer that won a competition on Jeopardy. AMD (NASDAQ:AMD) will handle the graphics card, with each console having a AMD Radeon HD GPU Graphics Card.
  • Nintendo has announced a lineup of 69 games that will initially be available with the Nintendo WiiU. Among them, 52 will be retail games, while the additional 17 will be downloadable for console owners. Here are some of the highlights of the retail games: Call of Duty: Black Ops 2, Darksiders 2, Fifa '13, Just Dance 4, Madden '13, Mass Effect 3, New Super Mario Bros. U, Skylanders: Giants, Untitled Super Smash Bros, Untitled Zelda, Wii Fit U, ZombiU, Zumba Fitness Core

Shares of Nintendo now sit around $15 a share. Over the past fifty two weeks, they have traded between $13.00 and $20.25. Shares traded close to $80 back in 2007 around the peak of the original Nintendo Wii launch. Yahoo Finance lists the company's book value at $14.32. I think the Nintendo WiiU launch will send shares to $20 by the end of 2012, representing a gain of almost 25% by the end of the year. If Nintendo can gain some exclusive deals or release more information their television prospects with TVii, shares could soar higher. The time to buy Nintendo shares is now, before the run-up anticipating the console release.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I own stock in Activision Blizzard (NASDAQ:ATVI), Majesco Entertainment (NASDAQ:COOL), and THQ (THQI), all have video game titles that were mentioned in the article.