NTDOY - Nintendo

[Liberty]

Fun ancedote:

 

 

Less fun one:

 

http://county10.com/201021174044426240/teen-playing-new-pokemon-game-on-phone-discovers-body-in-wind-river

[Foreign Tuffett]

Nintendo has ~$9 billion in cash and securities on their balance sheet.....and they are about to have even more.....

 

http://www.seattletimes.com/sports/mariners/mariners-sale-how-john-stantons-seattle-group-struck-a-deal-with-nintendo-of-america/

 

Have they given any indication that they might do anything useful with a portion of this? I know they've repurchase stock in the past.

 

 

[RichardGibbons]

I just got PokeGo to play with my son.  It was pretty fun wandering around the neighborhood, looking for things.  The highlight was bumping into a pair of young 20-something women playing it--quite a surprise considering it isn't even released in Canada yet.

 

My best guess is that it will burn itself out fairly fast, but the exact mapping of the game world onto the real world is pretty compelling in the short term.

 

Richard

[ScottHall]

I just got PokeGo to play with my son.  It was pretty fun wandering around the neighborhood, looking for things.  The highlight was bumping into a pair of young 20-something women playing it--quite a surprise considering it isn't even released in Canada yet.

 

My best guess is that it will burn itself out fairly fast, but the exact mapping of the game world onto the real world is pretty compelling in the short term.

 

Richard

 

I love Pokemon, haven't played Pokemon Go yet.

 

Nintendo always struck me as horribly undermonetized given all of the IP it holds. A Metroid film could be a huge blockbuster, for example.

[stahleyp]

I just got PokeGo to play with my son.  It was pretty fun wandering around the neighborhood, looking for things.  The highlight was bumping into a pair of young 20-something women playing it--quite a surprise considering it isn't even released in Canada yet.

 

My best guess is that it will burn itself out fairly fast, but the exact mapping of the game world onto the real world is pretty compelling in the short term.

 

Richard

A Metroid film could be a huge blockbuster, for example.

 

I don't know about that. Isn't the biggest movie tomb raider? That series is way more mainstream than metroid. I guess it really depends on how well the film is made but I wouldn't bet on it given the history of other ones.

[ZenaidaMacroura]

It's a really cool game, but the design is really really crappy.

 

There's a huge fanbase for the franchise though.

[fareastwarriors]

I just downloaded game last night. It was too late to wander but I already caught a charmander and geodude at home. Haha

;D ;D ;D

[Jurgis]

Yeah, looks like they fixed some stuff. And they added the first (?) pokemon to whatever location you start the app at.

[johnny]

This Pokemon Go thing is a complete disaster. It is incredible how much people are focusing on the positive (the desperation for a real Nintendo game on mobile) and not on the negative (the fact that Nintendo seems culturally incapable of pulling it off).

[ccplz]

This Pokemon Go thing is a complete disaster. It is incredible how much people are focusing on the positive (the desperation for a real Nintendo game on mobile) and not on the negative (the fact that Nintendo seems culturally incapable of pulling it off).

 

You seem to have an interesting definition of 'complete disaster'.

[Picasso]

Here I am at midnight strolling through pitch black parks trying to find a damn Squirtle. There's a ton of other people all looking for god knows what Pokemon. What fun...

[adesigar]

Here I am at midnight strolling through pitch black parks trying to find a damn Squirtle. There's a ton of other people all looking for god knows what Pokemon. What fun...

 

I'm sick, my daughter is not well but she wanted to go get some Pokémon, convinced her we will do it next week. I'm going to be walking a lot when we are both better. Also there a bunch of crazy people at the nearby Pokestops and PokeGyms. Its freaking midnight and theres Lure Modules active at the Pokestops.

[fareastwarriors]

Pokémon-Chasing Investors Send Nintendo Shares Soaring

 

Craze added $9 billion in market value to gaming company

 

http://www.wsj.com/articles/pokemon-chasing-investors-send-nintendo-shares-soaring-1468228206

[Jurgis]

Hah, almost bought on Friday for da shizz. Got dissuaded by crappy app and the fact that I did not like the company number-wise much. Decided not to "speculate".  ::)

[Picasso]

In many ways it reminds of of Apple back in 2000 or so, expect this investment is stranded in Japan.  Huge net cash balance, ridiculous brand power despite bad product launches and low market share (that's telling more than anything), and some hairy parts that turn off most investors.  Also complaints about the hardware business, etc. 

 

I mean practically half the business is net cash.  We saw what happened to the stock with a faddish Wii.  Properly monetizing their content has got to give you some pretty stunning upside since it would be more long-term and compounding in nature.

 

Anyway, an interesting stock. 

 

Edit: just as a thought exercise, how much do you think Disney will generate off their $4B purchase of Lucasfilm over its lifetime?  At a $10B Nintendo EV, there's no way you can't generate many multiples on that over time.  Just a matter of whether they do, not because they can't.

 

I convinced myself into buying in.  Where do I turn in my value investing card?  I think there's a rule against buying a stock 50% past your initial entry point.

[fareastwarriors]

Random thought. Malls/carnivals/street food fairs/those businesses looking for foot traffic can pay Niantic/Nintendo to have a Pokestop/gym or certain Pokémons to spawn there. Make it a limited time offer thing.  Seems like a win, win.

[ZenaidaMacroura]

Random thought. Malls/carnivals/street food fairs/those businesses looking for foot traffic can pay Niantic/Nintendo to have a Pokestop/gym or certain Pokémons to spawn there. Make it a limited time offer thing.  Seems like a win, win.

According to my GF, food trucks and small businesses in Houston are already dropping an item that "increases the encounter chance for wild pokemon" in a certain vicinity to attract players to their locations.

 

Those items are available for micro purchase in app already!

[Jurgis]

In many ways it reminds of of Apple back in 2000 or so, expect this investment is stranded in Japan.  Huge net cash balance, ridiculous brand power despite bad product launches and low market share (that's telling more than anything), and some hairy parts that turn off most investors.  Also complaints about the hardware business, etc. 

 

I mean practically half the business is net cash.  We saw what happened to the stock with a faddish Wii.  Properly monetizing their content has got to give you some pretty stunning upside since it would be more long-term and compounding in nature.

 

Anyway, an interesting stock. 

 

Edit: just as a thought exercise, how much do you think Disney will generate off their $4B purchase of Lucasfilm over its lifetime?  At a $10B Nintendo EV, there's no way you can't generate many multiples on that over time.  Just a matter of whether they do, not because they can't.

 

I convinced myself into buying in.  Where do I turn in my value investing card?  I think there's a rule against buying a stock 50% past your initial entry point.

 

Hah, see my post on SBUX thread on the trendsetting. The big Q for you or anyone is whether Pokemon Go is a fad for a week (month) or if it can revitalize the brand, the company, etc.

 

I would say it's a fad. Ez come, ez go. But that's just me - and I am not a good trendspotter. NTDOY might still do well even if it's a fad, but expect a huge leave of short term speculators and disappointed Peter Lynch wannabes if the popularity starts dropping.

 

 

[ZenaidaMacroura]

In many ways it reminds of of Apple back in 2000 or so, expect this investment is stranded in Japan.  Huge net cash balance, ridiculous brand power despite bad product launches and low market share (that's telling more than anything), and some hairy parts that turn off most investors.  Also complaints about the hardware business, etc. 

 

I mean practically half the business is net cash.  We saw what happened to the stock with a faddish Wii.  Properly monetizing their content has got to give you some pretty stunning upside since it would be more long-term and compounding in nature.

 

Anyway, an interesting stock. 

 

Edit: just as a thought exercise, how much do you think Disney will generate off their $4B purchase of Lucasfilm over its lifetime?  At a $10B Nintendo EV, there's no way you can't generate many multiples on that over time.  Just a matter of whether they do, not because they can't.

 

I convinced myself into buying in.  Where do I turn in my value investing card?  I think there's a rule against buying a stock 50% past your initial entry point.

 

Hah, see my post on SBUX thread on the trendsetting. The big Q for you or anyone is whether Pokemon Go is a fad for a week (month) or if it can revitalize the brand, the company, etc.

 

I would say it's a fad. Ez come, ez go. But that's just me - and I am not a good trendspotter. NTDOY might still do well even if it's a fad, but expect a huge leave of short term speculators and disappointed Peter Lynch wannabes if the popularity starts dropping.

 

I want to agree with you Jurgis, the game is horribly designed and it shows how much Nintendo has to improve to compete in mobile (it kind of justifies Activision buying King instead of in-housing it).

 

But if there's a way to do a major overhaul or patch the game it could have staying power.  I don't have it to verify but I'm hearing that the official version on PokémonGO is 0.29

 

If this is like any other game it implies that while the game is "launched" this is beta for Niantic...

[Jurgis]

The version is 0.29, but that may not mean much. Versioning philosophy differs a lot in different companies. And one company's beta is sometimes ten times better than other company's gold release.

[rkbabang]

In many ways it reminds of of Apple back in 2000 or so, expect this investment is stranded in Japan.  Huge net cash balance, ridiculous brand power despite bad product launches and low market share (that's telling more than anything), and some hairy parts that turn off most investors.  Also complaints about the hardware business, etc. 

 

I mean practically half the business is net cash.  We saw what happened to the stock with a faddish Wii.  Properly monetizing their content has got to give you some pretty stunning upside since it would be more long-term and compounding in nature.

 

Anyway, an interesting stock. 

 

Edit: just as a thought exercise, how much do you think Disney will generate off their $4B purchase of Lucasfilm over its lifetime?  At a $10B Nintendo EV, there's no way you can't generate many multiples on that over time.  Just a matter of whether they do, not because they can't.

 

I convinced myself into buying in.  Where do I turn in my value investing card?  I think there's a rule against buying a stock 50% past your initial entry point.

 

Hah, see my post on SBUX thread on the trendsetting. The big Q for you or anyone is whether Pokemon Go is a fad for a week (month) or if it can revitalize the brand, the company, etc.

 

I would say it's a fad. Ez come, ez go. But that's just me - and I am not a good trendspotter. NTDOY might still do well even if it's a fad, but expect a huge leave of short term speculators and disappointed Peter Lynch wannabes if the popularity starts dropping.

 

 

I think that Pokemon Go is indeed a fad and people will move on before too long.  But augmented reality is going to be huge.  My guess is that kids born this year will no more be able to imagine a world without augmented reality than millennials can imagine a world without the internet, or I can imagine a world without telephones, cars, and airplanes.  I still think glasses are next, followed by contacts, followed by implants.  The glasses/contacts might interact with the smartphone in your pocket at first, becoming standalone later on.

 

 

[Picasso]

Well as long as everyone on CoBF thinks it's a fad, I think it's probably okay to buy NTDOY. <Insert passive aggressive smiley>

 

It seems obvious to me that it's going to be a smashing success and only get better over time.  This is probably one of the most valuable franchises in the world and mobile is getting to the point where they can really start to monetize it.  All the prior successful mobile games were garbage repetitive pecking cash grabs, like candy crush or whatever.  But now you have a real massive multiplayer mobile game that can actually take advantage of this massive character universe.  It's like Pokemon was made for the technology that we have today.  Plus all the consumers who loved Pokemon (insert other Nintendo franchise) actually have money to spend.  Which means this app has a ton of value in terms of the traffic it can drive to various venues. 

 

Now compare what Nintendo has sitting in its pockets to the valuations recently paid for Supercell or Dreamworks Animation.  But the commentary from the finance community reminds me of Apple back in 2003.... https://valueinvestorsclub.com/idea/Apple_Computer/996

 

 

I agree that the company has great products and fanatical loyalty, but the question is can this proprietary model which has higher gross margins offset entirely by higher R&D SG&A expense compete effectively with Dell? In other words, can this company ever get to a "normalized" level of profits given its relative cost disadvantage?

 

Also, I get feeling that this company is being run for the benefit of satisfiying Steve Job's whims and not for shareholders given: 1) hoarding cash for God knows what (Vivdendi or another value-destroying acquisition?) 2) lack of share repurchases/dividends 3) egregious compensation for Jobs (e.g. a $90m airplane given to him by the company in 12/99 and 5m shares of restricted stock in 3/03).

 

[fareastwarriors]

Hunt for Pokémon Has Led to Painful Discoveries

 

Amid chasing characters, ‘explorers’ have hurt ankles, broken phones but also found kinship

 

http://www.wsj.com/articles/hunt-for-pokemon-has-led-to-painful-discoveries-1468255687?tesla=y

[rkbabang]

Well as long as everyone on CoBF thinks it's a fad, I think it's probably okay to buy NTDOY. <Insert passive aggressive smiley>

 

It seems obvious to me that it's going to be a smashing success and only get better over time.  This is probably one of the most valuable franchises in the world and mobile is getting to the point where they can really start to monetize it.  All the prior successful mobile games were garbage repetitive pecking cash grabs, like candy crush or whatever.  But now you have a real massive multiplayer mobile game that can actually take advantage of this massive character universe.  It's like Pokemon was made for the technology that we have today.  Plus all the consumers who loved Pokemon (insert other Nintendo franchise) actually have money to spend.  Which means this app has a ton of value in terms of the traffic it can drive to various venues. 

 

Now compare what Nintendo has sitting in its pockets to the valuations recently paid for Supercell or Dreamworks Animation.  But the commentary from the finance community reminds me of Apple back in 2003.... https://valueinvestorsclub.com/idea/Apple_Computer/996

 

I'd compare it more to the release of the Wii, which was supposed to change video gaming forever.  It was just a fad.

 

Chart of how well the Wii (released in 2006) worked out for shareholders

[plato1976]

well, I think a key difference is that Apple had SJobs back then, and I don't have that high regards for nintendo's current mgt

so maybe we shouldn't be that excited...

 

Picasso, what's the rough upside you see from this level? Maybe you see it as a long term compounder?

 

Well as long as everyone on CoBF thinks it's a fad, I think it's probably okay to buy NTDOY. <Insert passive aggressive smiley>

 

It seems obvious to me that it's going to be a smashing success and only get better over time.  This is probably one of the most valuable franchises in the world and mobile is getting to the point where they can really start to monetize it.  All the prior successful mobile games were garbage repetitive pecking cash grabs, like candy crush or whatever.  But now you have a real massive multiplayer mobile game that can actually take advantage of this massive character universe.  It's like Pokemon was made for the technology that we have today.  Plus all the consumers who loved Pokemon (insert other Nintendo franchise) actually have money to spend.  Which means this app has a ton of value in terms of the traffic it can drive to various venues. 

 

Now compare what Nintendo has sitting in its pockets to the valuations recently paid for Supercell or Dreamworks Animation.  But the commentary from the finance community reminds me of Apple back in 2003.... https://valueinvestorsclub.com/idea/Apple_Computer/996

 

 

I agree that the company has great products and fanatical loyalty, but the question is can this proprietary model which has higher gross margins offset entirely by higher R&D SG&A expense compete effectively with Dell? In other words, can this company ever get to a "normalized" level of profits given its relative cost disadvantage?

 

Also, I get feeling that this company is being run for the benefit of satisfiying Steve Job's whims and not for shareholders given: 1) hoarding cash for God knows what (Vivdendi or another value-destroying acquisition?) 2) lack of share repurchases/dividends 3) egregious compensation for Jobs (e.g. a $90m airplane given to him by the company in 12/99 and 5m shares of restricted stock in 3/03).