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Nintendo's Market Value Briefly Tops Sony's
by James Brightman

Nintendo is really feeling the momentum of the Wii and DS. On Monday the company's shares hit a record high, enabling the maker of Mario to surpass Sony in market value for a brief period of time. More within...


Last week we reported that Nintendo's market value was quickly approaching that of rival Sony. New reports from Reuters and other news agencies now show that Nintendo actually overtook Sony for a period on Monday to become one of Japan's 10 most valuable companies, including Honda, Toyota and Canon.


Nintendo's shares rose to a record high 46,350 yen in the morning, increasing its overall market value to 6.57 trillion yen ($53 billion), which allowed it to surpass Sony's market capitalization for a time.


The company's shares, however, finished the day a bit lower putting Nintendo back in 11th place behind Sony, but still ahead of Panasonic maker Matsushita, whose sales are over eight times larger than Nintendo's. Nintendo's market value closed at 6.39 trillion yen on Monday, just below Sony's 6.48 trillion yen.


"It is becoming quite clear that Nintendo is taking back its market share from Sony in the console market while well defending its stronghold of portable games," commented Mizuho Securities analyst Takeshi Koyama.


For all the positives surrounding Nintendo right now, though, Koyama cautioned that investors need to be very careful with the stock. "This is one of those companies that is not exactly making daily necessities. One negative factor and shares could take a dive. We need to be careful in dealing with shares like this," he said.


Other analysts pointed out that Nintendo's success isn't necessarily a sign of Sony's failure. "I don't think this is a case of Sony being in bad shape as a company. Rather, Nintendo is doing well with the Wii," remarked Soichiro Monji, chief strategist at the equity management department of Daiwa SB Investments. He added, "However if you look at Nintendo's price-to-earnings ratio it is quite high. So I think the stock has largely factored in some of the future growth."


Sony in fact has been doing quite well despite recent struggles with the PS3. The company's shares have increased 66 percent over the past two years, outperforming the Nikkei average, which rose 57 percent. It's just that Nintendo has been doing much, much better. Nintendo shares have skyrocketed nearly fourfold over the same period.
 
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