https://www.marketwatch.com/story/nintendo-rides-excitement-over-new-gaming-device-2010-03-24
By V. Phani Kumar, MarketWatch
March 24, 2010, 12:44 a.m. EDT
HONG KONG (MarketWatch) -- Shares of Nintendo Co. and its parts suppliers surged Wednesday after the Japanese video-games giant announced plans to introduce a portable 3D gaming device a day earlier, feeding hopes the new launch will provide a fresh trigger to boost slowing sales.
The new gaming console, provisionally called the Nintendo 3DS, will extend the company's hugely popular Nintendo DS series of handheld gaming devices, and will include "backward compatibility" so that existing games can also be played on the new console.
In a short announcement it made Tuesday, Nintendo didn't disclose the pricing or specifications of the new gaming console, on which games with three-dimensional capability can be played without the need for any special glasses. The company said more details will be announced in June at the E3 Expo, an annual video game conference and exhibition held in Los Angeles. Nintendo said the new device would be launched in the financial year starting April 1.
797427,970, +70.00, +0.25%
Nintendo (NQB:NTDO.Y) (OSE:JP:7974) , which has sold more than 125 million units of the DS series handheld consoles as of December 2009, currently dominates the portable gaming consoles market, but sales have been slowing in recent months. The company is currently among Japan's largest by market capitalization, with its outstanding shares currently valued at about 4.28 trillion yen ($47.54 billion).
Several analysts have recently highlighted the need for a new launch from the company to meet growing competition from social networking sites such as Facebook, which offer online games for free, as well as from games that can be played on smart phones, such as Apple Inc.'s (NASDAQ:AAPL) iPhone.
Rex on Techs: 3-D TV
Just when you were getting comfortable with HDTV, Samsung and Panasonic now have models that feature three-dimensional viewing for about $3,000, along with glasses and some other goodies. Ready to fork it over? Rex Crum has the analysis.
"We think the announcement about the Nintendo 3DS will start shifting the market's focus from how far profits are likely to fall in the current game console cycle to how far they can grow in the next-generation game console cycle," J.P. Morgan analysts wrote in a report.
J.P. Morgan said Nintendo's announcement was a "positive surprise," as it came sooner than many had expected, and as "the concept of 3D gaming without glasses goes beyond what the market was expecting."
"Judging from the timing of this announcement, it could conceivably be rolled out in time for the Christmas 2010 season, in which case it may provide a bigger boost to earnings in [the financial year starting April 1] than we currently anticipate," they said.
J.P. Morgan maintained its overweight rating and December 2010 price target for Nintendo shares at 34,000 yen ($378), based on a price-to-earnings ratio of 23.
In Wednesday's trading in Tokyo, Nintendo's shares surged 8.8% to 30,300 yen, on course to register their biggest one-day percentage gain this year. Shares of companies such as Mitsumi Electric Co. and Hosiden Corp. -- which supply parts and do assembly work for Nintendo -- also soared following Nintendo's announcement, with Mitsumi (TSE:JP:6767) jumping 3.4% and Hosiden (OSE:JP:6804) (NQB:HOIE.F) climbing 3.6%.
Meanwhile, shares of rival Sony Corp. (NYSE:SNE) (TSE:JP:6758) , which sells the competing PSP handheld gaming device, lost 2.1%.
In wider market activity, the Nikkei 225 Average gained 0.2% to 10,790.88, with China's Shanghai Composite rising 0.2%, Hong Kong's Hang Seng Index adding 0.4%, South Korea's Kospi climbing 0.2%, Australia's S&P/ASX 200 advancing 0.6% and Taiwan's Taiex up 0.5%.