Nintendo plunges on warning, Jefferies takes contrarian position

Nintendo (NTDOY -14.9%) shares plunge after the company reversed itself on projections, issuing guidance for a ¥35B loss in the FY ending March.

Jefferies, however, raised its PT to ¥29K (shares currently trade at ~¥14.6K) and reiterated a Buy rating, noting that "Our Buy thesis on Nintendo has been predicated on the company missing the President's 'commitment' of ¥100b OP and being forced to change."

Jefferies predicates its contrarian view on the notion that Nintendo's failure will force it to move into mobile: "We believe Mario on mobile is coming."

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Comments (5)
  • Matthew Davis
    , contributor
    Comments (4746) | Send Message
    Wow, even worse. Will they go the road of SEGA and disappear?
    18 Jan 2014, 11:51 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (7514) | Send Message
    With all due respect I don't think these analyst(s) ever played a Nintendo-style-game themselves or looked at mobile game pricing closely enough.


    There are at least three major obstacles for ""We believe Mario on mobile is coming" (their words), namely:


    1. Control schemes for most Nintendo IP simply doesn't work on touch-screens with a few notable exceptions (Pokemon-style games could work well).
    Nintendo would have to sell a hardware controller along with the games - which would be clunky and affect portability.


    2. Pricing on Android and iOS is very different (lower) than what Nintendo currently generates and needs because of its traditional high-cost development struture. I doubt Nintendo will sell games at $5-$20 on Android or iOS, except for maybe some back catalogue titles working good enough on touch screens.
    (And I doubt Android/iOS gamers are willing to spend above $20 for games given that titles like Angry Birds are selling for 0.99$)


    3. The very moment Nintendo moves important IP to Android/iOS, sales of its 2DS and 3DS devices would plummet rapidly.
    These two mobile devices are the only ones holding Nintendo above water at the moment given the disastrous Wii U sales numbers...Nintendo can't afford the switch.
    20 Jan 2014, 01:25 PM Reply Like
  • V Trading
    , contributor
    Comments (2) | Send Message
    Not if they grab the bull by the horns and make some changes.


    The handheld market is being eaten alive by tablets and smartphones and their next dedicated handheld probably won't even manage the same numbers the 3DS is pulling.


    If they decide to keep the Wii U which is officially DOA and a busted flop at this point on the shelves till 2016 you are probably looking at sunken R&D and inventory write downs and loss of 3rd party royalties etc. which will be a 2 billion loss off the top of my head.


    They still have plenty of cash but they need to diversify instead of willingly sitting and bleeding out for the next two years with excuses.
    20 Jan 2014, 03:30 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (4746) | Send Message
    All they had to do was keep the same Wii control scheme and just adding a pro controller with HD graphics by AMD and they would be a close #3, they are idiots.
    21 Jan 2014, 05:48 PM Reply Like
  • mitrado
    , contributor
    Comments (2033) | Send Message
    The same Jefferies that recommended Buying $AMRN around $15 with a Price Target of $37? I won't ever trust anything they say.
    26 Mar 2014, 11:26 AM Reply Like
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