Nintendo (NTDOY) will be available in North America on November 18. According to a Nintendo enthusiast site, Best Buy (BBY) is taking pre-orders for the Nintendo Wii U. The basic model will sell for $299.99, whilst the premium model will sell for $349.99, with 8GB and 32GB of storage, respectively. The premium version will also include Nintendo Land.
Subscribers of Kapitall Wire will have read what it meant for the industry when the console is released. Nintendo shares closed that day at $14. Since the rumors of the release were confirmed, shares traded recently at $15. The decline in console games is nothing new, but it is continuing, as both Sony (SNE) and Microsoft (MSFT) have not updated their console.
Nintendo’s release will likely encourage its competitors to respond to the Wii update, maybe sooner than the rumored fall 2013 release date.
Best Buy’s Opportunity
One clear winner from Nintendo’s Wii U release is Best Buy. After falling steadily throughout 2012, markets decided that Best Buy will not survive competition from online retailers. The back to school season, along with Black Friday and Christmas will help Best Buy. If Best Buy closes unproductive stores, improves sales per square foot at its mobile-only stores, and reduces costs, the company will survive.
In an odd move, Best Buy is also pre-selling Amazon’s (AMZN) new Kindle devices. Best Buy likely determined it would be advantageous to raise consumer traffic to stores than to lose potential kindle sales to Amazon.
Business Section: Investing Ideas
Looking to invest in the traditional retailer space? Here are some plays on the industry:
1. Best Buy Co. Inc. (BBY, Earnings, Analysts, Financials): Operates as a retailer of consumer electronics, home office products, entertainment products, appliances, and related services primarily in the United States, Europe, Canada, and China. Market cap at $6.26B, most recent closing price at $18.58. Best Buy was rumored to be going private, but shares fell after a new CEO was hired.
2. RadioShack Corp. (RSH, Earnings, Analysts, Financials): Engages in the retail sale of consumer electronic goods and services through its RadioShack store chain and kiosk operations. Market cap at $275.45M, most recent closing price at $2.77. Beware. Radio Shack shares are on a trending decline and likely face further challenges as it competes with Best Buy.
3. Wal-Mart Stores Inc. (WMT, Earnings, Analysts, Financials): Operates retail stores in various formats worldwide. Market cap at $248.98B, most recent closing price at $74.07. Wal-Mart sells more than just electronics, earning a more diversified source of income for investors
5. GameStop Corp. (GME, Earnings, Analysts, Financials): Operates as a retailer of video game products and personal computer (PC) entertainment software. Market cap at $2.72B, most recent closing price at $22.07. GameStop will benefit from selling both new and used Wii U consoles.
Online retailers looking to marginalize the above retailers are:
6. eBay Inc. (EBAY, Earnings, Analysts, Financials): Provides online marketplaces for the sale of goods and services, as well as other online commerce, platforms, and online payment solutions to individuals and businesses. Market cap at $61.84B, most recent closing price at $47.99. Shares are at a 52-week high, because the company is not just a flea market. eBay owns Pay Pal, and greatly simplified seller listing by encouraging the use of “buy now.”
7. Amazon.com Inc. (AMZN, Earnings, Analysts, Financials): Operates as an online retailer in North America and internationally. Market cap at $115.56B, most recent closing price at $255.63. Amazon is used by consumers as a place to buy things, after window shopping at Best Buy. Shares are at a 52-week high and have what looks to be an excessive P/E.
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- Best Buy Co. Inc. (BBY, Chart, Download SEC Filings)
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- Staples, Inc. (SPLS, Chart, Download SEC Filings)
- GameStop Corp. (GME, Chart, Download SEC Filings)
- eBay Inc. (EBAY, Chart, Download SEC Filings)
- Amazon.com Inc. (AMZN, Chart, Download SEC Filings)
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