So for work I do corporate law with an emphasis in securities law. I read financial statements on a daily basis. I will just say this after looking at Nintendo's numbers. There is absolutely NO chance the Wii U will kill Nintendo or its line of consoles. Sales of WiiU could be 100 times worse and it would have little to no effect on how strong their financial position is. Next time someone tells you Nintendo is in trouble slap them upside the head. That's not to say they don't have issues, but all businesses do. Really quick though one good measure of how well a company is doing is current assets to current liabilities ratio. Current assets are things that can be converted quickly to cash (if they aren't already cash) and current liabilities (debts, accounts payable, etc.). A good ration would be 2 current assets for every 1 current liability. Nintendo has an absolutely staggering 4.4 to 1! That is huge! Nintendo also has no debt whatsoever.
Sony, on the other hand....I am not going to argue they are in danger of going under, because they are not. But their ration is about .83 to 1. Meaning they have more liabilities then assets. That is beyond awful. Sony also has a substantial amount of debt.
As a company Nintendo is in a solid place right now. Say what you will about the Wii U, anytime anybody even suggests that it is going to ruin Nintendo or take it out of the console market they should get slapped with the dummy stick. It's a stupid thing to argue and now that you all know I am sure no one will be making that argument.
Nintendo has sold 4 Million units of Wii U. Nintendo has sold 10 Million Units of 3DS / 2DS / 3DS XL. Nintendo has sold Millions of first party titles.
People say nintendo are doomed. Lol.
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Thank you for that information. It is good to know from a business stand-point, not just a Game Developer stand-point, that Nintendo is doing very well.
People keep saying the Xbox One doesn't have Backwards Compatibility.
I don't think they know what Backwards Compatibility means...
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I agree that they have a lot of assets compared to liabilities but they are having an poor operating income. I don't mean Net income. I mean Operating income! But lucky for Nintendo is that they are recovering from the operating income.
I got an source here directly from Nintendo from October 2013. I think they should increase the contribution margin by reducing the cost of the projects or increase the prices.
As a follow up, I just look at the quarterly's for this year. Nintendo is on pace to have more in total net assets this year then they have had at least since 2009, probably ever. They are fine.
Its doesn't matter if people know. there is still going to be that one person that think is this is a bunch of BS and try to counter it or even make up some false excuse to prove that s/he is right. Its been said time and time again that Nintendo has billions in extra cash that isn't being used for anything and that they are doing fine but people still say that the Wii U's sales are going to bring the end to Nintendo. Sega had problems long before the Dreamcast and they were on the verge of bankruptcy so they dropped out of the console race and became a 3rd party dev to save the company, All but one console of Nintendo's has sold at a profit. That one console was the Virtual Boy and that was pulled off the shelf just over a year into is sales life due to a lack of interest and concern of health problems. The Wii U is still selling at a profit regardless what others are saying. Anything that sales at a profit is a success.
@cameronbelmont: Negative operating income is ALWAYS a bad news unless you are starting out. I wouldn't invest in Nintendo until they start gaining some positive operating income. Operation income is a way of the business such as selling consoles, softwares, and paying expenses. According to Nintendo it is an Fixed assets payment is the problem and I can see that since they did a price drop on Nintendo 3DS and Wii U to make contribution margin so little. Contribution margin is an difference between price and cost of the products. Contribution margin got its term because you are contributing to the fixed asset payment. If you got leftover money after paying for fixed asset payment then you got an profit!
I understand that, they have to get their operating income up. Simple fact is Nintendo lost money last year and is losing money this year. However, my point still stands. They have a lot built up in assets. You are right. There is a problem in their contribution margin and that needs to change. What's more concerning to me is they have as much as they do in current assets and they aren't reinvesting them perhaps as quickly as they should.
Yes Nintendo got very hight liquid ratio (quick ratio) just like you say. Not only you do not understand but also I do not understand why it is so hard for them to use those money for investment? I might have to look at the cash-flow statement to find out if they did an investment.
I understand that, they have to get their operating income up. Simple fact is Nintendo lost money last year and is losing money this year. However, my point still stands. They have a lot built up in assets. You are right. There is a problem in their contribution margin and that needs to change. What's more concerning to me is they have as much as they do in current assets and they aren't reinvesting them perhaps as quickly as they should.
Yeah, Nintendo is too conservative for their own good there. Smarter investing off of Wii/DS profits could have helped prevent this, you can't just sit on great profits and expect it to always be there if you're not active in this business, gaming is too volatile. At least it's an enormous pot and Nintendo could continue taking losses for ages if necessary.
Yeah, Nintendo is too conservative for their own good there. Smarter investing off of Wii/DS profits could have helped prevent this, you can't just sit on great profits and expect it to always be there if you're not active in this business, gaming is too volatile. At least it's an enormous pot and Nintendo could continue taking losses for ages if necessary.
Probably not for ages. In fact, that cash reserve could disappear pretty quickly if they are not careful. But I think it would take dramatic events for them to get to that point.
There's also the fact that the early life of a console is the most difficult. They're spending money developing content rather than making money on content they've already created. So their finances should turn around when instead of making the Smash Bros, Mario Karts and Zeldas they're starting to sell them.
Although from a gamer's perspective I'm actually happier with the Wii U and 3DS than I was with the Wii and DS. The eShop is much more indie friendly and there's plenty of content there. There's been generally better third party support even though it's not as much as some expected. The online overall is much better and the big first party titles are more impressive than the previous generation counterparts were at the time. So frankly I don't care about their financials, if they keep this up they deserve to do better. If they don't then consumers should have a long hard look at why they're into games IMO
Hey, does anyone here wanna talk about videogames? That'd be a fun change...
No this is fun
I like seeing how people justify the current sales, go on about how Nintendo has enough money to outlast the sun, etc etc.
LOL What? People are saying that because they know what they're talking about and it's true. Not everybody here is justifying current sales though.
Technically they do have a big enough war chest to last ages. Even a weakened Sega had the cash from Brazil, the Genesis, and the Japanese Saturn to R&D and sell the Dreamcast with a 56k modem (state of the art for the time, first appeared in 1998 IIRC, same year as Dreamcast debuted in Japan with a 33.6k) and bleed for several years before they were forced third-party:
"ruin Nintendo or take it out of the console market"
I understand that Nintendo won't be financially ruined by the Wii Us potential complete and utter failure, neither the N64 nor Gamecub sold particularly well but they kept going. The 3DS is selling, the 3DS XL is selling, and presumably even the 2DS is selling. And they own IP rights to Mario et al. But if the Wii U continues to flounder why not stop w/ the home console market already? Home consoles are expensive and there is a lot of competition, both on the high end w/ Sony and MS and on the low end w/ set top boxes. Why shouldnt the company say "enough w/ home consoles they aren't profitable" and just focus on handhelds? And lets face it, they haven't been very good at programming HD games. I think a hybrid is the way to go. Why make both MK7 and MK8 when you can just make MK9 on a handheld w/ a HDMI dongle like Crhomecast or Vita tv in the box? Why choose between putting Luig's Mansion or Kirby (the new 3DS game looks like a sequel to the Wiis Return to Dreamland) on the handheld or home console? Just make a hybrid. Couch multiplayer would be more expensive, everybody would need their own system, bu tit might still be cheap for families than buying both a Wii U 2 adn 3DS 2.
Guess I just don see why you seem so sure the Wii Us failure wouldn't cause Nintendo to re-think putting out a new home consoles. Well if it fails. If it somehow manages to become a success then obviously they'll put out a new one.
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Topic: Nintendo Financials
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