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It’s the “back to school” shopping season not the holiday period, still Nintendo’s seen enough.  With a slightly stronger dollar improving exchange rates and continuously impressive demand for both the Wii and DS (not to mention software), the Kyoto based game company upgraded their annual profit forecast by 23% Friday.

Wii sales forecasts have been notched up to 26.5m units (from 25m) for the fiscal year ending in March 2009.  Forecasts for the DS portable have been pushed to 30.5m units, up from estimates of 28m.

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Yesterday’s “Applevine” post on Metue summarized some of the current Apple reports and rumors circling the news world.  One of the elements included was a recap, and light review, of newly reported data on how the new iPhone supporting “App Store” is doing.   The numbers were impressive and there is clearly great potential but the take here was cautionary; a bias toward pragmatism with predictions.  One month seems too slight a sample to use for accurately forecasting revenue growth or impact on EPS.  A few raised flags of dissent. 

One comment speculatively said the store could be a 80 to 85 percent gross margin business.  Another said that the store could add as much as ten or twenty cents to quarterly earnings per share.  Those numbers weren’t supported.  They were just “pie in the sky claims,” but still they are out there and they beg a question: what’s the App Store potentially worth – not qualitatively, not from a behavioral analysis, not from a zealous Apple fan, nor from a detractor – simply by the numbers.  If we set aside the opinion that one month of data is too little to be meaningful and use it anyway, if we break out the Graham & Dodd, fire up the spreadsheets, how much of a contribution could the App Store make to Apple’s bottom line if the current levels are annualized?  It’s got a great revenue story but how much for earnings?

How much might the App Store contribute to earnings per share if the store’s revenue grows to $500m, or passes $1 Billion? 

What might it mean to Apple shareholders on a standalone basis that disregards the store’s greater contribution as a driver of iPhone (and iPod Touch) sales?

There’s no easy answers, but in this post we’re going to try and set out a framework for looking at it – a way of adding numbers to wild speculation. 

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With most of the big names in the media/tech space reported, it’s been an up and down earnings season.   There have been some hits and some misses.  There’s been some positive guidance and some suspect.  Now three of the remaining big names have reported their performances.  Summing them up, here’s the tally from News Corp., Marvel Entertainment and Time Warner:

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Revenues are climbing consistently across the video game industry but in the seasonal business, some publishers are struggling more than others to wring profits from the windfall this summer.  Activision Blizzard, the newly minted combination of Activision and Vivendi Games, isn’t having as much of a problem.  With franchises like Guitar Hero pushing sales, the company announced strong earnings result Thursday for Activision’s last quarter of independence.  They also revealed a joint venture with Logitech to create new controllers for the next installment of the music game franchise.

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The monthly NPD reports tend to give a decent macro perspective on the video game industry economy in the U.S. market but there’s nothing like earnings season to unwrap the details.  Yesterday, Sony and Electronic Arts opened their books.  Sales were up.  Today, Nintendo, THQ and Capcom rounded out the story.  They and Disney, all reported results.  Here’s the earnings wrap up for all four consolidated to a single Metue report:

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Earnings season is always a busy time in the corporate finance world but for those watching the media and entertainment sectors, Tuesday was a day of particular information overload.  DreamWorks Animation, Electronic Arts, Sony and Viacom all reported quarterly results.  The news was mixed. There were some bright spots and some unpleasant surprises too.  One by one we’ve got the four consolidated into one place; a single stop to summarize all four quarterly performances.

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Streaming movies online can be expensive but not so much so that Netflix has any reason to worry. The mail-order-DVD pioneer came out Friday with better than expected Q2 earnings and up-adjusted guidance for 2008.

By the numbers, overall, Q2 net income rose 3.8% to 26.6m (42 cents a share), up from $25.6m or 37 cents a share for the same period a year ago.  Total sales were up 11% to $337.6m.  Netflix had previously forecast revenue in the range of $334m to $339m.  Excluding special items, profit was 45 cents a share, ahead of Reuters analyst estimates by about 4cents.

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