Nintendo (OTC: NTDOY.PK) net profit powered-up 143% yoy and sales boomed 135% yoy as Wii demand continues to outstrip supply and the handheld DS becomes ubiquitous. As I noted when first recommending NTDOY at SmartGuyStocks in June, the Wii is a revolutionary development in the gaming world that is doing what PS3 and Xbox360 will never do: going mainstream.
Goldman Sachs recently initiated coverage on NTDOY with a “Buy” rating. Besides the fact that Goldman (and most white shoe investment bankers) are late to the game, they bring a new wave of institutional and wealthy investors to the table. Seems like demand for shares of NTDOY may start following demand for the white-hot Wii and DS.
Although both Sony (NYSE: SNE) and Microsoft (Nasdaq: MSFT) have lowered prices for their consoles, the Wii and its games are still significantly cheaper. I was in Best Buy (NYSE: BBY) last weekend chatting with parents and teens in the video game aisles, and price-conscious parents are much happier with the cheaper Wii console and Wii games.
Parents know that the console is merely the first of many dollars sunk into interactive entertainment; games are constantly on every console owner’s “I Need” list. I also noticed that many people are happy that the third edition of Activision’s (Nasdaq: ATVI) pop hit Guitar Hero is available on the Wii.
People who want the stock to pull back so they can get in cheaper continue to focus on the undersupply of Wiis. However, I do not have much of an issue knowing that NTDOY cannot even produce enough Wiis to make the world happy. To me, that means sales will stay strong and grow gangbusters until at least the same time next year. Ho, ho, ho …
Disclosure: SmartGuyDH is long NTDOY