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Two Ways: Gaming Console Makers in Need of Repairs


Strengthen your portfolio in good times and bad.

Video Game Wars Rage On

It seems the reports were correct, after showing tremendous growth over the past few years, video games and console sales are beginning to slide as the global recession is driving down demand.

Last night Nintendo (NTDOY), the maker of the popular Wii gaming console reported a 61% drop in profits. Net income came in at 42.3 billion yen ($445 million), missing analysts estimates of 47.5 billion yen. It was the first time since 2006-the launch of the Wii-that sales of the console fell. The company did reiterate its full year forecast.

Sony (SNE), the marker of the Playstation 3, reported similar results saying that sales of its console fell 31%, adding to the 39.7 billion yen first quarter loss compared to a profit of 4.6 billion yen a year earlier.

These reports concur with the 25% drop in revenue for the Xbox 360 as reported by Microsoft (MSFT) last week.

For more on the gaming wars, check out Minyanville Professor Michael Comeau's article.

From the Bull Pen: THQ (THQI), the maker of the popular UFC Undisputed video game, reported a strong quarter yesterday but the stock sold off due to weak guidance and a convertible note offering. Checking a daily chart it shows a gap down to support at the $6.50 level. Those bullish could initiate a long position with tight a stop loss at $6.50.

From the Bear Cave: As growth of the console market slows, those bearish could consider a stock like Sony with a buy stop at $26 which happens to be the level of its 50 DMA.

Quick Check Around the World

Asian trading closed with the Hang Seng 0.49%, India 1.41%, Shanghai 1.69%, Nikkei 0.51%, and Taiwan -0.80%.

Across the pond, we see the FTSE 1.38%, CAC 1.13%, DAX 1.13%

As of 8.00 AM EST, S&P Futures are trading 7.00 to 982.00 and Nasdaq futures are 10.25 to 1611.00.

A Look at Commodities

Over in commodities, crude oil is trading 0.67 to 64.02 while gold is 5.30 at 932.50 this morning. Silver is 0.12 to 13.40 and copper 3.90 to 251.65.

The dollar/euro 1.4072 and yen/dollar 95.12.

Check out the trading radar for the full list of earnings ahead.

Have a great day!
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No positions in stocks mentioned.

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