Nintendo Close to Overtaking Sony’s Size

Stock Tickers: NTDOY, SNE, AAPL

There is an interesting take out of Reuters in Japan today, showing that Nintendo (NTDOY-OTC) is catching up to Sony (SNE-NYSE/ADR) in market value (market cap in U.S.).  The report says that Nintendo has overtaken Matsushita today and is now closing on Sony.  Nintendo’s market cap of 6.3 trillion Yen is equivalent to almost $51 Billion today, compared to 6.23 trillion Yen for matsushita and 6.64 trillion for Sony.  Nintendo shares have risen nearly four-fold compared to a more than 70% gain out of Sony.

Last month’s NPD data put Nintendo’s Wii gaming system outselling the PlayStation 3 console by 3-1 in Japan and 2-1 in the U.S.  The Nintendo DS handheld gaming system is also chugging far more in market share than the Sony PSP. 

Reuters gave some basic data observation here, but there are many things to consider far outside of the article.  Nintendo has found a way to reinvent itself while Sony has found a way to marginalize itself.  From a U.S. standpoint, Sony is rapidly becoming a company that has more expensive plasma and LCD TV’s and has a gaming system that costs too much.  The good news is that they have other electronics, cool digital cameras, and a movie/entertainment studio that buyers don’t shy away from.  Nintendo is all-gaming and has been knocking the socks off Sony.  Sony is also the one that stupidly wasn’t able to take the Walkman to the next level, which allowed Apple’s (AAPL-NASDAQ) iPod to takeover the world.  Nintendo spent roughly a decade in the backseat after the Sony PlayStation took the world by force, and now it looks like it is getting some payback.

The law of big numbers will probably come into play at some point, but right now it is hard to find a true-believer in Sony.  Sony may even have to further consider some serious strategic alternatives sooner rather than later.  Last week we noted that Nintendo needs to adopt a better ADR program rather than its OTC-quoted stock, and that still seems like a good idea.

Jon C. Ogg
June 20, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.