Nintendo Records Strong Q3 of Its Own, But Sony Steals the Spotlight (SNE, EWJ)

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Includes: EWJ, NTDOY, SNE
by: Steven Towns

Sony's ADRs (SNE) surged 12.2% yesterday after reporting surprisingly strong earnings and a revised full fiscal year forecast that turned around Sony's projections of being in the red by almost US$85 million to being in the black by nearly US$600 million. Longtime rival Nintendo (NTDOY.PK) also reported a strong third quarter yesterday in which consolidated net profit more than doubled to 55.56 billion yen (US$470.8 million) from 21.3 billion in FY04.* Nintendo is well on its way to exceeding its initial full fiscal year forecast and it's expected it will revise upward in coming weeks. Nevertheless, it was Sony that stole the spotlight earlier today in Tokyo as the Nikkei 225 (tracking ETF: EWJ) soared over 3.5%. Japanese investors had to wait a little to buy Sony shares because it reported earnings after the market's close on Thursday. Sony (Tokyo Stock Exchange ticker: 6758) jumped 14.17% on the day following a 2.63% gain yesterday in anticipation of earnings. Nintendo (TSE ticker: 7974) gained a not too shabby 2.51%.

Note: Nintendo has ADRs but they are pink sheets (NTDOY.pk). I generally stay away from the pink sheets given the lower liquidity and less strict listing and filing requirements. Nintendo's ADRs are .20 cents off their 52-wk high of $17.90. Yahoo! Finance shows they have a three-month average volume of 193k.

*Unless stated otherwise, a conversion rate of Y118/US$1 was used to translate yen figures into USD, which is an approximation of the rate at the end of December 2005.

SNE 1-yr chart:

NTDOY 1-yr chart: