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Nintendo Ruins Sony's Fun


Wii spells trouble for PlayStation maker.


Hello from New York, where if yesterday was about Mathew McConaughey, today is about embracing the hyperactive intolerance of Diamond David Lee; everybody is welcome as long as they're ready to rock. Here's what I'm looking as I dance with "the mood that brung me," turn the amps to 11 and work it while I got it (or work whatever it is I have left, anyway):

  • Elan (ELN) isn't just going to the edge but plunging full on into the abyss as early reports suggest brain risk in an early stage Alzheimer's drug trial. I've got no conviction in the name other than to say Elan is serving as a decent example of why I don't trade anywhere I simply can't fully understand the story. Success or failure is reliant on knowledge I don't have; good enough reason to avoid.

  • I do understand the cruelty lying in wait for the stocks of cult consumer products companies, which is why Garmin's (GRMN) tumble today is less "shock" and more "Greek tragedy." The stock may bounce but you don't need a GPS to know the trend. Very few companies in these kind of death spirals ever fully recover. A "good" outcome is something like Iomega, which disappeared from consciousness for years then got swallowed for a tiny fraction of its old highs.

  • Working slowly into enthusiasm, Electronic Arts (ERTS) is coughing up the bit after reporting weaker than expected results last night. The company is desperately seeking a second act after dominating its industry in a workman-like, if unexciting, way for the last generation. It's now relying on vague promises to "do better" and a drawn-out takeover bid for Take-Two (TTWO) to inspire shareholders. It's not a compelling story, even at today's discount.

  • Why did writing the above bullet point make me A) think of my Microsoft (MSFT) long and B) throw up in my mouth a little bit?

  • After reviewing various options strategies and not loving what I saw, I opted to simply trim a chunk of my Disney (DIS) long ahead of earnings tonight. It's more investment position than trade but the risk/reward into the number concerns me. A miss will take DIS lower. A beat will get a shrug. I'd add on weakness but the Theme Park Concerns are going to loom large, regardless of the EPS print.

  • Sony (SNE) is weak again today after Nintendo (NTDOY) reported and made the beating they are laying on Sony and Microsoft even more clear. NTDOY sold 5.17 million Wiis for the quarter. By comparison, Sony sold 1.56 million PS3s and Microsoft sold 1.3 million 360s. Today's lesson: The winners of the current console war shouldn't be assumed to win the next one (which is why I won't be long my Activision-Blizzard (ATVID) forever).

  • I just realized almost everything in that post was a bummer. Please note that Hasbro (HAS) is up a tick and it's a nice day outside.
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Positions in MSFT, DIS, ATVID.

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