Tuesday, June 13, 2006

Analyst Injects Dose of Reality into Apple-Nintendo Merger Rumor

GameDaily BIZ talks to David Cole at DFC Intelligence about the rumor that Apple (AAPL) is looking into acquiring Nintendo. Cole remarked "That does sound pretty crazy. You know for years and years it was like Nintendo and Sega were going to merge any day... Obviously Nintendo has done really well in terms of their profitability and their market value has really held up—if you go back and look at how their market value has held up over this past generation compared to, say Sony (SNE) and Microsoft (MSFT), who have seen drastic declines in their market value. And if you consider that Nintendo was considered sort of the loser in the last generation, and now they've got the opportunity to go into a new generation and restart their market share... clearly, it might not be the best time from their side to be looking to sell."

Cole continued, "You would think if they were looking to sell it would be more if the Wii came out and was a huge flop; then maybe you'd start talking more about those types of rumors, but clearly it's very speculative. When you're talking about mergers of that size, there's always so many moving parts, especially when you've got an established Japanese company possibly merging with a North American company—and that's always just very speculative. Even if they start talks, it's just months and months of trying to get together and oftentimes they just clash at the last minute. But people are always going to be speculating."

Cole added, "[Apple] could start reaching out to see if Nintendo is interested, and then they say no. That would probably be the most likely scenario that I would see. You know, companies are always talking with each other... which can lead to rumors and speculation. It just goes on all the time. The chance of something actually getting finalized is a totally different ballgame."

Cole concluded that he "wouldn't be terribly surprised" if Apple did become more active in the games space.