« | Home | »

Numbers are fun: Super awesome stock update

posted on April 18th, 2007 by pat

While at work today, and trying to justify thinking about video games, I became curious about the recent performance of the three companies gamers (probably) follow most closely. Thus you now get to read a rundown of how Microsoft, Sony and Nintendo stock has performed since the launches of the 360, PS3 and Wii respectively. But first a few caveats. With nothing besides perception to back this up, I’m going to say that Wii sales are more important to Nintendo than either of the other consoles are to the their companies. While I’m not sure, and I would be willing to listen to arguments to the contrary, I would say Microsoft is least reliant on its games division, but Sony obviously has diverse business interests as well. This means that stock moves could have nothing to do with game sales, and I am completely spinning my wheels. Maybe it will be a fun ride anyway.

In any event, on to the stats. The Xbox 360 launched on November 22, 2005, when a share of MSFT was worth $28.16. Since that time, the stock has done…basically nothing, and ended April 17th at $28.85, a change of 2.4%. The Sony ADR (see * down below for why I use ADRs for Sony and not Nintendo) and the Osaka listed Nintendo stock have both performed exceptionally well since last November, when both Wii and PS3 were released. The PS3 launched on November 17, 2006 when Sony’s stock was worth $40.79, whereas now it is worth $55.20, netting stockholders a cool 35.3% profit. Nintendo’s stock was worth 26,000 Yen the before its launch. Price as of April 17th – 37,150 Yen (and recently off its record high) making for a difference of 42.8%. Not bad for six months.

I have inserted this stock chart in order to prevent this article from killing anyone from sheer excitement.

While the market was up over this period, it was not by nearly as much as either Sony or Nintendo. And just to make it clear that not all Tech/Electronics companies (or game companies) were on fire during this period, Microsoft was basically flat (actually slightly down). For both companies that were successful over this period, but especially for Nintendo, this implies that sales of their hardware and software have been exceeding the markets expectations.

Something that does not seem to completely jive with this bulletproof stock analysis is the fact that Sony seems unable to sell any consoles, at least in any region that matters. It’s possible analysts realize that Sony loses money on each PS3 sold, and thus see it as a good thing that they are collecting dust , but there are other potential reasons. (The preceding sentence is not possible and instead what passes for finance humor.) One is implied above; the stock could be reacting to the Electronics or Music divisions. It is probably also relevant that the PS2 (and its games) actually still sell very well.

In somewhat perplexing Sony news, they are simultaneously claiming a tremendous PS3 launch in Europe and laying off a significant percentage of their European workforce. The way I see it, either Sony had a good launch and is telling the truth that they are merely “streamlining” their European operation, or they are publicly stating they are happier with the European launch than they privately are, and cutting workers as a result of missed sales expectations. It’s tough to tell from several thousand miles away, but it seems as though Sony sold a lot of systems in Europe. While only about half as many Europeans are enjoying the PS3 as are enjoying a Wii, Nintendo’s system was available before the holidays and Sony’s only hit shelves last month. So while there may be some skeptics out there (and elsewhere on this site) I’m giving Sony the benefit of the doubt. Maybe there really are redundancies in Sony offices on the continent.

There will be no redundancies.

May as well make it a Sony dominated post – I think Sony’s decision to run Folding@Home on PS3s is brilliant. It is terrific publicity for several reasons, among them the fact that they can almost legitimately claim the console cures cancer, and they have also stated its system is much more effective at running the program than PCs, which implies quite a bit about its power (at least to someone as ignorant about computers and their power as I am).

I also think it’s the right thing to do. However, Sony execs are apparently considering spending some of that accumulated goodwill by offering the distributed computing model to for-profit companies. The suggestion is that someone will offer gamers something for donating their processing power. It seems Sony would have to do so, since if I were running Folding and Sony wanted me to run MakeSomeCorporationMoney@Home I would expect some kind of compensation. Call me an optimist (since the offer will probably be key chains or some other crap), but if the payment for services rendered ends up being substantial (discounted games or services perhaps?) Sony may have a good idea on their hands. Of course my inner hippy is outraged that so much brute computational force, that would otherwise have been going towards curing prion diseases will end up inventing useless widgets. Still, labelling this anything other than clever business would be hypocritical, since I am not in the Peace Corps and spend all my money on beer and video games.

* ADR stands for American Depository Receipt, and allows stocks of foreign companies, such as Sony, to trade in US dollars on an American Exchange, such as the New York Stock Exchange. While Nintendo does have an ADR listed in the States, it trades too infrequently to accurately reflect the price. I defaulted to USD when possible since it’s easier for me to think in those terms. While there would be some foreign exchange impact on an American investor buying Japanese stocks, or vice versa, the overall point remains the same, it means good things for the company when the stock goes up, and the more the better.

No Comments Yet

You can be the first to comment!

Leave a Reply