Nintendo Co saw its stock fell the most in nine months after it missed estimates for quarterly profit and forecast full-year earnings that were short of expectations, raising concern about demand for its Switch game console.
The shares fell as much as 4.7 percent in early trading in Tokyo yesterday, the biggest intraday drop since April 26, before closing 3.55 percent lower at ¥40,770.
A day earlier, Nintendo reported operating income of ¥168.7 billion (US$1.55 billion) in the three months ended December, but that underwhelmed versus the ¥175.4 billion average projection.
Photo: AP
The lackluster results might fuel worries about the Switch console’s longevity, especially in a year when Microsoft Corp and Sony Corp are preparing to launch new machines for the holidays.
Nintendo released a lower-cost Switch Lite in the fall, reaching out to more mainstream users, and that console has sold 5.19 million units to date, the company reported.
“We expect the results to have a negative impact on the shares over the near term,” Mitsubishi UFJ Morgan Stanley Securities Co analyst Hirotoshi Murakami wrote in a report. “We will be closely watching efforts that Nintendo makes to overhaul its mobile games business.”
Mobile game revenue rose about 11 percent from a year ago, totaling ¥36.9 billion in the nine months ended Dec. 31.
Mario Kart Tour was a runaway hit on smartphone platforms: It was downloaded nearly 124 million times in its first month alone, comfortably eclipsing prior Nintendo mobile game debuts, Sensor Tower data showed.
Fire Emblem Heroes has emerged as Nintendo’s biggest mobile earner, grossing US$656 million since its launch almost two years ago, Sensor Tower data showed.
Nintendo’s total earnings from mobile games topped US$1 billion to date across six titles, the researcher said in a report.
Still, the company’s mobile business accounts for a tiny fraction of its earnings and it has fallen short of an earlier promise to launch two or three new titles per year.
Nintendo has been criticized for being slow to roll out key features — like multiplayer functionality for Mario Kart Tour, which is still in beta — Jefferies Group analyst Atul Goyal wrote in a report.
The company has also offered little visibility for its future game pipeline, Goyal said.
Nintendo’s holiday lineup included two new entries in the Pokemon franchise — Pokemon Sword and Pokemon Shield — which sold a combined 16 million units since their debut on Nov. 15.
Ring Fit Adventure, an US$80 exercise game that comes with a flexible plastic ring attachment for a motion-capture setup, sold more than 2 million units since its release in October, Nintendo said.
“We expect investor interest to shift” to the company’s strategy for sustaining earnings growth in the fiscal year starting April, SMBC Nikko Securities Inc analyst Eiji Maeda wrote in a report.
“We focus on whether the firm announces strategies for further expanding Nintendo Switch sales, title lineups, and new smartphone game titles,” he said.
Nintendo and its local partner, Tencent Holdings Ltd (騰訊), began selling the Switch in China on Dec. 10, a move that excited Nintendo investors hopeful of tapping a new market.
The optimism has been tampered by the historically lackluster performance of Sony’s PlayStation and Microsoft’s Xbox consoles, which have not had great success over several years of trying to crack the market where smartphones remain the dominant gaming platform.
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