switching gears now. So if you thought getting your
hands on a Playstation five or a Nintendo switch was
hard. Now the companies that make those consoles are
warning that it may get even harder. In fact
, Sony Nintendo are expecting their consoles to be in
short supply for the rest of the year joining now
is to discuss, this is hot hot tub,
Diab, managing partner of Gerber, Kawasaki in hot
um what do they mean by short supply and why
is this happening? Hey ken how are you?
Thank you for having me. Um it's it's tough
. I mean the supply chain issues that are really
hurting a lot of companies and uh Sony especially makes
almost of their councils in china. So the supply
chain issues coupled with the semiconductor shortages are just really
killing the the available available availability of these of these
councils. So let's focus on Sony for a bit
. The PS five has been hard to get since
it launched in 2020 with all that time. Why
haven't they been able to figure this out? I
mean if one is the PS five is very very
popular. Right? So it's it's the hardest thing
you you want in game and basically, but then
to it's just I don't think anybody expected the supply
chain in china to get this bad. I think
we all thought Covid was over and we are going
to reopen and then omicron happened so you couple that
with some, so my conductor issues and then you
have a situation where you just, you just can't
make, you can't make enough of them now since
this shortage is expected to last for the rest of
the year. How should investors feel about Sony?
Um, I don't think, I think if you
like Sony before this, you should, that should
not change your opinion about the company. I don't
think this is gonna be a huge hit with the
revenue per se. But I think in reality,
um, the, what, what, what these
companies are doing and they're just tempering expectations. Really
. They're saying, hey, listen, it may
get tougher. I want to, I want to
set the right expectations for the markets. Uh,
so in case things get better. We, we
, we, we, we, we will,
will have better numbers and I think really china is
going to reopen. So assuming assuming they get,
they get ahold of their, some of the microchip
or some of the semiconductor issues. I think the
supply chain issues will get better. Let's talk about
Nintendo. Nintendo says it expects sales for switch console
to fall 9% over the next year. Since is
more dependent. Nintendo is more dependent on video game
hardware sales than Sony. How will it make up
for the drop in switch sales? Um, they
have a very, very powerful software business. I
mean they have, I think seven or eight games
slated to come out this year. I think Nintendo
does a much better job building some really awesome games
. I don't know if he heard of the game
animal crossing. It's basically put him back on the
map. Uh, so I think they actually there
, their forecast actually says they're gonna do 14 billion
in revenue, which is about what they did last
year. So they will make up for these,
these shortages simply because they have such a powerful slate
of games. Now. A Nintendo which trades overseas
, also announced a 10 for one stock split today
. Can you explain what this means and why the
company is doing this? Uh, so Japan,
right? The, I think the price of 100
shares of Nintendo is$40,000, so that really,
uh, locks up a bunch of individual investors,
you know, you've got to have$40,000 to buy
100 shares. It's just prohibitive. Right? So
the idea here is really to reduce the price per
share so they can get more individual investors involved in
, in, in, in, in the stock
. Uh, this is something that we see a
lot of here in the United States, you know
, an individual or retail investors that are a huge
part of the stock market here, but it's not
the case in and outside of the US. So
I think what Nintendo is trying to do is to
get these, these retail investors more involved now.
It's, it's not good news for gamers when there's
no PS five's, but what does this console shortage
mean for the retailers that carry these machines. I
mean, listen, anytime you don't have a product
on your shelves, that's bad for business, right
? Like, you know, you don't get customers
in the stores and as a result they don't,
you know, they don't buy other stuff so everyone
is suffering from this I think in every product category
by the way, so we need to get these
supply chain issues solved because everyone is suffering from this
and it just sucks, it's just unfortunate. Alright
, E. A. And roadblocks are two other
gaming companies expected to report earnings today after the bell
. What are you expecting from them? Um rob
lox is a fantastic company. Obviously the stock is
going through a really tough time. The problem with
roadblocks is they're basically competing with the real world,
right? Like we have such tough comps where all
kids were staying at home now things have opened up
, you know, kids are going out there playing
tennis and sports and and so forth. So the
reality is just they're not gonna, the numbers are
not gonna be as good, You're not gonna see
see as much engagement revenues are gonna be down.
Uh so they're just really in a tough tough situation
because the real world is kind of winning. And
I think if you're a parent you want your kids
to be outside and not being on roadblocks as long
, you know, So let me ask you my
last question for you if it's the last for the
rest of the year, what does it mean come
holiday season when Playstation five's Xboxes and nintendos, which
are the hot ticket items on every kid's wish lists
and there's none on the shelves. I mean it's
, it's gonna be a lot of heartbroken kids can't
get their, their, their, their, their
wish list. I don't know, I guess complained
to santa, it's gonna be tough, you know
, I think gaming is, is always gonna be
there. It's, it's a powerful trend, It's
one of the fastest growing uh segment in the entertainment
business and unfortunately this is gonna hurt, you know
, so hopefully we get some of these supply chain
issues figured out so, you know, kids can
come back to gaming, you know? Alright,
well we will talk around christmas over the sounds of
Children crying, timothy managing partner at Gerber Kawasaki,
It's always a pleasure. Thank you brother.