Would you buy it right now? Places have rated it as a sell, and there don't seem to be any prospects for it in the medium term--even Iwata says to give them 3 years. And the next quarterly results announcement is going to be a big loss, by Nintendo's own projections.
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Nintendo initiates 9.5 million share buyback ($1 billion, Yamauchi inheritance)
- Thread starter Captain Smoker
- Start date
efyu_lemonardo
May I have a cookie?
thanks for the reply!
No. That doesn't really have anything to do with the topic though.
Nintendo is buying the shares to keep the massive amount of equity in the company from being publicly sold and devaluing the stock, hurting Nintendo as well as their shareholders. If Nintendo has to buy them back, now is a good time to do it, as it's near 10 year lows.
I doubt the Yamauchi family would be selling if the stock hasn't been at a downward trend and at near 10 year lows, however. You can say it's a chicken or egg thing.
Lupin the Third
Member
Hasn't it been mentioned multiple times that they're probably getting hit hard with taxes over this inheritance? Gotta pay that bill somehow!
RMS Gigantic
Member
Yamauchi used to be Nintendo's largest shareholder. I guess now, Nintendo's largest shareholder is... Nintendo.
Yamauchi had money and Nintendo shares. He likely gave both to his children/grandchildren.
The tax man wants 50%, so they have to hand over some or all of the cash (the tax man don't accept shares). If they got more shares than cash, then they have to sell some of the shares to raise some money.
But they're selling 2/3 of their shares to Nintendo, and someone said they're planning on selling the other 1/3 after Nintendo takes a year to recover (has more spending cash in their wallet, and hopefully raised the stock value). Even if they inherited zero cash, selling 2/3 is selling more than they needed to sell. They want to cash out. They would rather have money than shares.
BTW, in 2008, Yamauchi was the richest man in Japan, worth $7.8 billion. In 2013, he was worth $2.1 billion. Thanks Iwata.
Well, it's not the only purpose, I'm sure, but it's not something without consideration. Including the fact that Nintendo's been backed into a corner to buy them anyways, so you might as well use them for something.
It would really depend. Mergers, yes, the stock dips. Acquisitions are another story. If it's seen as something that strengthens the company as a whole and is likely to pay for itself, the market can be forgiving. And if the acquired company has reason to believe Nintendo's stock will take an upswing, they'd take it. It's often why companies consider it in lieu of cash, it's a gamble that can be worth a higher amount than straight-up cash ever could be, and why they're sometimes considered more valuable in such a transaction.
Hmm..
Captain Smoker
Member
tehrik-e-insaaf
Member
Cheerilee - the inheritors did not sell 2/3rds of their shares - it would have been impossible for them to release that many shares in the market and silly as well from a financial perspective - at best they sold a portion of their shares for inheritance tax purposes - and may sell the remaining shares over a period of the next decade - but this was expected and there is no reason for them to hold onto the company when they have nothing to do with it anymore. It pushes NCL to be more responsive to the evolving shareholding base and that is one of the reasons they built up such large cash reserves.
Moreover based on the public info we have - Yamauchi's cash was nowhere near enough to cover a billion dollars in tax liability (and the cash itself was taxed too) - enough to cover some shares but most likely just enough to cover the properties that they inherited as Yamauchi was one of the largest land-owners in Kyoto - the last big chunk of money he took out was when he sold about half a percent of the company and it involved a full sale of all his shares and a buyback of exactly 10% to generate some liquidity several years ago - Yamauchi also donated a lot of cash to charitable causes over the past 3 years including a cancer hospital
BTW - I am not sure where you get your info but I think your sources may not be correct all the time - for example, a screenshot of a subsidiaries list from a financial report you posted in an earlier thread about Rare was impossible to verify - I tried fact-checking it for hours and none of my investor reports matched up - infact I could not find a single report where HAL was ever listed as a subsidiary of NCL, which isn't surprising since HAL is a third party and NCL never owned shares in it beyond Yamauchi providing a personal loan to them for restructuring. Again I don't know your sources so I could be wrong entirely and I apologize if that's the case.
Nirolak - You are right - but in this case, Nintendo-style acquisition would most likely involve cross-shareholding to protect against hostile takeovers - so yes while cash is generally preferred in traditional Western-style M&A - in Japan, acquiring treasury shares and spreading them around companies and taking on their stock gives management the ability to both have partial ownership in another firm (for the purposes of collaboration) while exercising voting rights on those treasury shares by placing them in trust with other companies where they can be on the board and exercise votes.
IIRC Namco/Bandai/Capcom did this about 10 years ago and swapped 20% shares each to protect against takeovers.They ended it after Namco/Bandai merged. The goal and structure pursued by companies like Nintendo in M&A would be very different than the way Google or other tech companies acquire companies in Silicon Valley. In such cases it can make sense to have a sizable amount of treasury shares for share swap purposes.
Aquamarine - I understand your frustration - but I wouldn't overstate how much influence Yamauchi had on the Wii or the DS - he had a two-screen idea and told Nintendo to shoot for a novelty with the console - moreover, the Wii U was based exactly on Yamauchi's push for a second screen (there is an article about this). There is a variety of literature on this subject - but the best is to watch Miyamoto's GDC talk from 2007 where he talked about how NCL was thinking about getting out of console hardware that I think you will find interesting - you should also read a book called "Nintendo Magic" - which while a bit lame - will give you some idea of how the Wii went about being conceived as well as Yamauchi's true role with the company at that time.
Moreover, management styles of Iwata / Yamauchi are very different. Yamauchi would be a disaster for NCL today - particularly when he was totally against collaborations for the most part and ran an organization that was much smaller compared to NCL today. Iwata runs a giant company now - with operations around the globe, huge presence in Europe, online/offline marketing, thousands of global retail relationships, a variety of complex manufacturing relationships with a sophisticated supply chain, a variety of technology partners, investment in middleware and focus on development kits, maintaining a public face for the company, and a huge number of internal and external studios and subsidiaries with 3x the employees Yamauchi ever managed. All this in a hyper competitive market with tremendous talent scarcity. Iwata also delegates product responsibility to Miyamoto, Kelbaugh, and Takahashi among others. Yamauchi would have never done such a thing when he was actively running NCL preferring to make most production decisions himself.
/Done with this Thread
Moreover based on the public info we have - Yamauchi's cash was nowhere near enough to cover a billion dollars in tax liability (and the cash itself was taxed too) - enough to cover some shares but most likely just enough to cover the properties that they inherited as Yamauchi was one of the largest land-owners in Kyoto - the last big chunk of money he took out was when he sold about half a percent of the company and it involved a full sale of all his shares and a buyback of exactly 10% to generate some liquidity several years ago - Yamauchi also donated a lot of cash to charitable causes over the past 3 years including a cancer hospital
BTW - I am not sure where you get your info but I think your sources may not be correct all the time - for example, a screenshot of a subsidiaries list from a financial report you posted in an earlier thread about Rare was impossible to verify - I tried fact-checking it for hours and none of my investor reports matched up - infact I could not find a single report where HAL was ever listed as a subsidiary of NCL, which isn't surprising since HAL is a third party and NCL never owned shares in it beyond Yamauchi providing a personal loan to them for restructuring. Again I don't know your sources so I could be wrong entirely and I apologize if that's the case.
Nirolak - You are right - but in this case, Nintendo-style acquisition would most likely involve cross-shareholding to protect against hostile takeovers - so yes while cash is generally preferred in traditional Western-style M&A - in Japan, acquiring treasury shares and spreading them around companies and taking on their stock gives management the ability to both have partial ownership in another firm (for the purposes of collaboration) while exercising voting rights on those treasury shares by placing them in trust with other companies where they can be on the board and exercise votes.
IIRC Namco/Bandai/Capcom did this about 10 years ago and swapped 20% shares each to protect against takeovers.They ended it after Namco/Bandai merged. The goal and structure pursued by companies like Nintendo in M&A would be very different than the way Google or other tech companies acquire companies in Silicon Valley. In such cases it can make sense to have a sizable amount of treasury shares for share swap purposes.
Aquamarine - I understand your frustration - but I wouldn't overstate how much influence Yamauchi had on the Wii or the DS - he had a two-screen idea and told Nintendo to shoot for a novelty with the console - moreover, the Wii U was based exactly on Yamauchi's push for a second screen (there is an article about this). There is a variety of literature on this subject - but the best is to watch Miyamoto's GDC talk from 2007 where he talked about how NCL was thinking about getting out of console hardware that I think you will find interesting - you should also read a book called "Nintendo Magic" - which while a bit lame - will give you some idea of how the Wii went about being conceived as well as Yamauchi's true role with the company at that time.
Moreover, management styles of Iwata / Yamauchi are very different. Yamauchi would be a disaster for NCL today - particularly when he was totally against collaborations for the most part and ran an organization that was much smaller compared to NCL today. Iwata runs a giant company now - with operations around the globe, huge presence in Europe, online/offline marketing, thousands of global retail relationships, a variety of complex manufacturing relationships with a sophisticated supply chain, a variety of technology partners, investment in middleware and focus on development kits, maintaining a public face for the company, and a huge number of internal and external studios and subsidiaries with 3x the employees Yamauchi ever managed. All this in a hyper competitive market with tremendous talent scarcity. Iwata also delegates product responsibility to Miyamoto, Kelbaugh, and Takahashi among others. Yamauchi would have never done such a thing when he was actively running NCL preferring to make most production decisions himself.
/Done with this Thread
I was going by this post, which said that Yamauchi had 14.5 million shares, and that Nintendo is buying 9.5 million.
Official Nintendo info confirms that (as of Sept 2013) Yamauchi owned 14+ million shares, and the OP shows that they're buying 9.5 million. That's 2/3 of Yamauchi's shares, unless Nintendo is buying them from somewhere else.
I have no special source of info. I'm just a guy who spends too much time on forums, I tend to soak up useless info when it catches my fancy, and I'm usually not shy about answering questions when someone asks and I think I know the answer. I'm wrong more often than I'd like, as that Rare reference reminds me (I recently tried to sum up some things about Rare, and somebody tweeted my summary to Chris Seavor, who said that my conclusions were all wrong, but as usual for insiders, didn't really bother to set the record straight).
As for that image, I grabbed it a long time ago from a 2001 PDF on Nintendo's site. I believe it was the Annual Report, but...
http://www.nintendo.co.jp/ir/en/library/annual/past.html
... those only go back to 2002.
I would ask you to settle for my word that it was 100% genuine, but then I found this.
http://www.nintendo.co.jp/ir/en/library/earnings/2000-2002.html#y2001
The "Earnings Release" for 2001.
http://www.nintendo.co.jp/ir/pdf/2001/010524e.pdf
The flowchart on page two looks really different, but it seems to have all the same info. HAL Labs is listed as class "d", an "Affiliated company with equity method applied" (Nintendo's technical definition of a Second Party), same as Retro Studios, Silicon Knights, and one of the five Rares.
Cygnus X-1
Member
What an interesting reading. Thank you.
Yamauchi stepped down as head of Nintendo in 2002 and became a board member for the next 3 years. Halfway through 2005, about a year and a half beforethe Wii came out he retired entirely. I am sure he had some input on the Wii but I don't see why you think it was mainly his doing or why he was still mainly in charge for years after he retired entirely.
And even if what you're claiming is true the 3DS is still doing fine, so it's not like he's been a complete failure.
Regardless the main point I was attempting to make is that Iwata is still in the position so saying appointing him was a mistake is jumping the gun. You won't really be able to say for sure until he's finished.
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