The shares have already priced in the 'blue sky' scenario. Looking ahead, we expect prices of their hardware to fall, with the peak demand for software being 2007 and 2008. We sold out of all our holdings; although enamoured with what they do, there's a price for everything and the current price is not it. It is also likely that we are now nearing the peak of the whole games cycle.
Nintendo is winning the latest round of the console wars with its new 'Wii' console outselling Sony's PlayStation 3 by a margin of 4 to 1. The company is now entering the most profitable stage of the product cycle; R&D costs and capital expenditure will fade away whilst cash flow will be very strong. An additional catalyst is coming from selling extra controllers for the Wii - the company makes a 60% gross margin on these goods.
| Sedol |
Type |
Price |
Date |
| 6639550 |
Sell |
JPY 53,837,037 |
25/01/2008 |
| 6639550 |
Buy |
JPY 43,813.333 |
19/06/2007 |
|
