Pachter on Nintendo’s 2008 fiscal forecast: too conservative

Wedbush Morgan Securities analyst Michael Pachter has decided to put Nintendo once again in the spotlight by saying that the company’s fiscal 2008 forecast was a little too conservative considering its robust sales during the previous year. He raised the estimates accordingly and said that the company still has a chance to do better in the coming year.

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After Nintendo’s recently released statement showing the next nine months of the company’s fiscal calendar for 2008, Wedbush Morgan Securities analyst Michael Pachter says that Nintendo’s forecasts remained rather conservative and that they could still do better.

In Nintendo’s announcement, it expects to raise its fiscal 2008 sales forecast by up to 5.2 percent of Â¥1.63 trillion, with a net income of Â¥275 billion by the end of the first nine months. According to Pachter, Nintendo’s assets should hit around Â¥1.66 trillion instead.

In terms of hardware sales, Pachter continued by saying that estimates for both the Wii and DS were still low considering its robust sales during the previous year. Nintendo estimated Wii sales to be around 18.5 million, while DS sales averaging 29.5 million units.

Pachter explained the conservative numbers Nintendo released by saying:

As we expect Wii production levels to be slightly higher than 20 million for the fiscal year, we think that there may be 1 million units upside to the companyÂ’s guidance… [We] think [NintendoÂ’s] DS software estimates remain too low.

DS software sales are plentiful, with an attach rate over 2.5 units per hardware unit during the fiscal year. This tie ratio suggests to us that the company could sell close to 250 million units of DS software next fiscal year.