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Topic: Predictable Pachter: 'Nintendo Probably Can't Recover from' Wii U

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moomoo

21. Posted:

@kkslider5552000 Indeed. I really wonder how the heck this industry is still alive when budgets for games are getting higher and higher and take longer to make and yet games cost about the same amount of money to buy today as they did in 1996 and prior. It just doesn't make sense.
If I was an investor, I'd be getting the heck away from gaming. And if I had Pachter's job, I'd probably be saying what he's saying to his clients. Nintendo's not going to be as big as they used to. Not necessarily a bad thing, mind you. The GBA/Gamecube era wasn't totally atrocious for the company.

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theblackdragon

22. Posted:

Retro_on_theGo wrote:

If Nintendo can recover from the GameCube I think they can recover from anything.

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rayword45

23. Posted:

What about the Virtual Boy? Better example?

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kkslider5552000

24. Posted:

rayword45 wrote:

What about the Virtual Boy? Better example?

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RancidVomit86

25. Posted:

Another article that's should just be titled "someone says something to upset nintendo fans everywhere"

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Prof_Clayton

26. Posted:

@RancicVomit86 Actually, this news doesn't upset me. It makes me laugh at its sheer stupidity. Patcher is the best Stand-up comedian I know. ;)

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RancidVomit86

27. Posted:

Everyone seems to praise him when he says something they agree with and call him stupid when he doesn't.

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Unca_Lz

28. Posted:

RancidVomit86 wrote:

Everyone seems to praise him when he says something they agree with and call him stupid when he doesn't.

Now now, this is the internet. No logic is necessary!

Actually, Pachter has "bashed" Nintendo so much that everyone "hates" him, even when he's praising Nintendo

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RancidVomit86

29. Posted:

As I put in a previous thread but it was a thread where people were agreeing with him

"I don't think I've gone a week without having an incorrect prediction. Nobody cares if I'm right, except fanboys. My clients are merely looking for a benchmark in front of numbers so that they can assess whether the stocks of the companies I cover will go higher or lower." - Michael Pachter

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SCAR392

30. Posted:

Ya, his predictions don't matter. At least to me. Anyways, this generation for Nintendo will show that what they would have done last gen, which I think will be worth seeing. We've all seen the tricks companies do to make things look better than they are with shaders, lack of color, super tectures, etc.
Nintendo is basically developing tons of hardware enhancements by targeting HTML5, Java, and multimedia codes to get next gen running on their console regardless of the hardware.
This might sound crazy, but look up 'Dead or Alive 2 Dreamcast vs. PS2', and tell me which ones better. I think the differences and comparisons between those consoles defines what we're gonna see this gen pretty well.

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Discostew

31. Posted:

In most cases, whatever Pachter says, the opposite usually happens. That's the way it has been with Nintendo predictions anyways.

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Bankai

32. Posted:

RancidVomit86 wrote:

As I put in a previous thread but it was a thread where people were agreeing with him

"I don't think I've gone a week without having an incorrect prediction. Nobody cares if I'm right, except fanboys. My clients are merely looking for a benchmark in front of numbers so that they can assess whether the stocks of the companies I cover will go higher or lower." - Michael Pachter

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I like Pachter. The guy's clearly sick of the monkeys calling him an idiot and decided to point out what he actually does.

And of course the monkeys don't listen. Oh no. They know what Pachter does better than Pachter. And of course they know what the job of an analyst is better than an analyst at one of the most lauded analyst firms in the world.

Good old monkeys. Always ready to throw some poop. :-)

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19Robb92

33. Posted:

In what sense, sales momentum?

They made profit of off the WiiU at launch.. So I don't see them doing too bad.

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SCAR392

34. Posted:

I would say he's right in some ways, but he doesn't really know what's going on in the games and the actual hardware, does he? The Xbox 360 is now being caught up to the Wii, but Nintendo has had 6 different versions of DS, DSi, and 3DS handhelds, that did really well, and Wii U adds another 3 million or so sales on top of that. Worldwide, there's way more Nintendo consoles in people's houses than anything besides Apple products. Let's not forget that 5-10% of those Xbox 360s aren't even functional anymore, maybe more since warranties are bound to expire. I'd say Nintendo is gonna do great, but that's just me. They might not have their newest products in everyone's hands yet, but last gen is everywhere from all companies, and it's gonna be hard to replace those consoles unless they really are that great, and it makes what we have now look like junk.
Wii U is already guaranteed a place for this next gen of consoles, and I think we'll be able to get more than some you think out of Wii U.

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Shrapmo

35. Posted:

Is Packter a professional troll or something? I mean really!

Here is a new petition to get Metal Gear Solid Rising: Revengence on the Wii U!!!
http://www.change.org/petitions/konami-platinum-games-metal-gear-rising-revengeance-for-the-nintendo-wii-u

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RetroGBHippie92

36. Posted:

I hate Pachter, he's a false prophet and most of the time he's completely wrong. I mean analysts are analysts but this guy doesn't think Nintendo ever does or will do well these days, when it's completely the opposite when he states his cases. I think he should be truthful and tell his clients that Nintendo is worth investing in, clearly he loves them, no doubt about it , but being a right PC business man forces him to lie through his teeth and not admit to being a fanboy. I know he loves Nintendo and he's a hypocrite, how? look at the office he works in and see what he has stacked behind him, yep Nintendo games.
If I ever get to University, I'll write a damn good essay about the patheticness of his business practices, he doesn't know where to be fair and give constructive criticism and when he does it's always only about a game that's sold particularly well on a nintendo console/handheld.
You know well that he praises Microsoft and Sony more, but what if what he knows he's always wrong about Nintendo? I don't get it, it sounds to me that is how he makes his money because his mouthing offs about nintendo get fanboys and gamers in general agitated and therefore gains audience.
IMHO, If I'm to study Business at University in the future, I don't want to follow his route, people should be truthful and it's easy to fall into bad practices, like Pachter lieing about Nintendo constantly.

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Xiao_Pai

37. Posted:

I don't even care anymore.

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Sean_Aaron

38. Posted:

He has some decent points and like all these analysts - regardless of industry - his job is to advise clients and make these kinds of comments in a vain attempt to influence the companies in question. I don't really have a problem with what he says, I have a problem with the stock market which enables these kinds of comments.

Really I think Nintendo stock taking a dive and the company going private would be a great outcome. It would mean industry comments like Pachter's would be totally irrelevant and Nintendo could focus more on running its business than keeping shareholders happy.

Edited on by Sean_Aaron

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brooks83

39. Posted:

I know moomoo posted part of Pachter's follow-up, but I am going to post the full text. If you actually read it, you can see that his conclusion came about by using FACTS and DATA, not out of some hatred towards Nintendo. Before accusing him of being a troll, why don't you read his reasoning for having the opinion he does, because it makes a lot of sense. To anyone curious, this came from the website NeoGAF.

"First, I must apologize for calling two thirds of you (censored). It's probably more like 5%, so I was overly sensitive in my generalization.

Second, and to the point, there is actually some reasoning behind my comments that the Wii U is a mistake from which Nintendo may not recover, and I threw the 3DS' cannibalization from smart phones and tablets in there to make a point.

Nintendo has historically made money, and a lot of money, on each hardware unit sold. The DS at $99 US is more profitable for them than the 3DS at $169 (see many quotes from Nintendo in Kyoto about losing money, or being barely profitable). The DS sold 23.5 million units in FY:07 (ended March 31), 30.3 million in FY:08, 31.1 million in FY:09, and 27.1 million in FY:10. Nintendo made money, and a lot of money, in each of those years.

I think it is instructive to use operating income in Yen as a guide, since Iwata said he would consider resigning if Nintendo did not earn ¥100 billion in FY:14. Nintendo made ¥90 billion in FY:06, ¥226 billion in FY:07, ¥487 billion in FY:08, ¥555 billion in FY:09, and ¥356 billion in FY:10. In FY:11, DS sales dropped to 17.5 million units, and operating income fell to ¥171 billion; in FY:12, combined DS and 3DS sales were 18.6 million units, but operating income disappeared, and Nintendo generated a LOSS of ¥37 billion. Obviously, the loss was impacted by lower Wii sales and lower software sales, but the point here is that the 3DS doesn't generate much of a profit per unit, if any, and the DS did.

Over the same period, Wii hardware sales were 0, 5.8 million, 18.6 million, 25.9 million, 20.5 million, 15.0 million, and 9.8 million. We have been repeatedly assured by Nintendo that the company makes a profit on every Wii sold, but as sales leveled off at 10 million, the company printed its first loss ever.

In FY:13 (the current year, ending next month), Nintendo is projected to sell 17.3 million DS and 3DS units combined, and to sell 8 million Wii and Wii U units combined, and is projected to generate an operating loss of ¥20 billion. That means that current levels of sales keep the company at roughly breakeven.

My comment about the Wii U being a "mistake" from which the company "may not recover" was intended to say that if Wii U sales don't materially improve, Nintendo is unlikely to be profitable. They have around ¥1 trillion (around $11 billion) in cash, so they aren't in danger of going out of business for decades. However, if they aren't profitable, they aren't doing a good job for shareholders.

To elaborate, if the Wii U is not generating profits, and if the 3DS is not generating profits, the only thing that will generate profits is software. Nintendo is ensured high sales of its proprietary software, but it makes the most money on its royalty business, collecting fees from third parties for the privilege of letting them put out games on Nintendo platforms. Publishing (software) revenues peaked at ¥675 billion in FY:09, and are on track to come in around ¥235 billion this year; my call is that if hardware sales don't materially improve above current combined levels, software sales are unlikely to materially grow. If software sales don't materially improve, losses or break even will become the norm. Nintendo will not "recover" to its formal highly profitable glory.

The poor sales of the Wii U in January are likely to impact third party publisher plans to support the console. Notice that GTAV is not on the Wii U; that wasn't a typo, they don't see enough promise in sales to cause them to spend extra development dollars on a Wii U version. I have spoken to several publishers who are skeptical, and I think that the Wii U will see a lower level of third party support than the Wii did, unless sales materially improve. If I'm wrong, I'll admit it, but without third party titles, Nintendo will not generate its customary levels of royalties, and losses or break even could become the norm.

Many of you point out that the 3DS is selling better than the DS at a similar point. That's true, but the DS was always profitable, and the 3DS is not. Also, the DS saw sales go from 8.8 million units in its first four quarters to 18.0 million its next four, to 20.2 million in its third full year; I'm pretty confident that the 3DS will not get to 20 million units, but even if it did, it would generate little profit from hardware. Keep in mind that the DS redesign to a lite version boosted sales, and there was little competition for 12 year-old and older from smart phones and tablets. Now, parents who can afford it are opting for Kindles, iPads, and smart phones for their teenagers, and the more casual of those are perfectly happy playing Angry Birds and putting their DS or 3DS into a drawer.

The important point is that if 3DS sales level off at 15 million and Wii U sales level off at 8 - 10 million, software sales will be much lower than they were in the past. If Nintendo doesn't make a profit on hardware, they can't afford to cut prices further. If they do cut price, it will likely occur as their manufacturing costs come down, but I don't expect big hardware profits in the foreseeable future. They are stuck with software profits, and at current sales levels, they are unlikely to make an overall profit from software.

That's it, not trolling, but that is my reasoning.

To the 5% of you who ARE (censored), bring it on ;-)"

Edited on by brooks83

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Haywired

40. Posted:

I know everyone here always gives Pachter a hard time, but to be fair, compared to Nintendo fans' predictions (which start and end with: "All Nintendo consoles will destroy all the competition all the time"), the guy's frigging Nostradamus.

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