That was fast. Nintendo’s stock is being downgraded by KBC Securities Japan to “hold” from “buy” because of fears that demand for the DS portable game player, and the red-hot Wii console, will decline over the next year.
KBC said sales in the U.S. and Europe are “peaking” after a year of growth, and that the weakening dollar will cut into margins for the Japan-based Nintendo.
Reasonable enough to assume that at some point Wii sales will peak — even though Nintendo has done a great job at marketing its machines beyond the core gaming audience, at some point most people who want one will have one.
But the gaming business has two cycles: Console sales and game sales. And as console sales peak, game sales should ramp up. And here Nintendo should be in the best shape compared to competitors Sony (SNE) and Microsoft (MSFT). It owns many of its bestselling titles (Wii Play, Super Mario Galaxy, Super Smash Bros. Brawl), and has several more anticipated inhouse games (Mario Kart Wii, Wii Fit, etc). coming up. What are we missing? Let us know in comments.
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