Only a few months ago, it looked like it was "game over" for Nintendo. Its mainstay GameCube console was losing ground to Microsoft"s Xbox and Sony, which had already ousted the company from the top slot in the home market, announced plans for a hand-held game machine to challenge Nintendo"s Gameboy Advance. Nintendo answered with a series of price cuts that rejuvenated GameCube demand and sent holiday sales up more than 70 percent from a year ago. It is also launching a new, hand-held game machine that is not as high-tech as what Sony and Microsoft plan to roll out but still breaks new ground in the gaming world.
Investors are starting to sit up and take notice. "It"s undergoing a bit of a reconciliation and if you stop forecasting worst case scenarios, it looks quite cheap," said Jeremy Hall, a fund manager at Henderson Global Investors. The stock had a dismal 2003, tumbling to a six-year low in May and losing 10 percent in a year when the Tokyo stock market posted its biggest rise since 1999. Analysts say that was an overreaction, especially given Nintendo"s solid finances. "If you consider that its balance sheet is ridiculously strong and there is so much in cash and assets...then I don"t think the company"s valuation has been formally recognized," KBC Securities analyst Hiroshi Kamide said.