Nintendo's Share Value Takes a Hit Following Financial Results

Also rattles DeNA shares after suggesting other mobile collaborators

Nintendo's most recent financial results were some of the most contradictory the company has released in sometime - overall profits are higher than expected, but operational profits are expected to be down on previous projections. There were big download numbers for Super Mario Run, but a lower than hoped conversion of downloads into purchases. Net sales were rather dreadful, yet the 3DS and Pokémon in particular have had strong years.

Whatever perspective you want to take, you can find numbers and evidence to reinforce your argument. Interestingly, though the projected dividend for investors is now projected to be higher than previously expected for this year, the overall reaction of the market has been negative. Nintendo's share value dropped to its lowest point since Fall last year in the first day of trading following the financial reports, losing 2.1% to close on 22,625 yen. The second full day has been much quieter, with a small drop of 0.46% to 22,520 yen.

In its usual post-results round-up, Bloomberg cites analysts highlighting various factors behind the underwhelming response. The lowered projected operating profit and the perceived under-performing Super Mario Run are factors, with some unconvinced by Nintendo's mobile effort while acknowledging the impact of Niantic's Pokémon GO. Satoshi Kurihara, an analyst at Tokai Tokyo Research Institute, said the following.

The downgrade to their operating profit outlook was definitely a negative surprise. They're still not completely serious about smartphone games. That means more than ever the spotlight is on the Switch.

It'll be interesting to see how well Fire Emblem Heroes performs, which has now rolled out on iOS and Android.

Nintendo did shake up the mobile scene further, with company president Tatsumi Kimishima causing 'ripples' by suggesting the company could collaborate with other mobile companies beyond DeNA; this prompted DeNA's shares to drop as far as 11% at one point, with the likes of GungHo seeing small boosts.

Beyond mobile, the jury is still evidently out on the Nintendo Switch, which will naturally be under pressure to match 3DS sales levels and avoid the fate of Wii U - Tatsumi Kimishima, for his part, is confident. In a predictable turn of events considering the 'hot today gone tomorrow' nature of financial markets, the focus is very much on Switch as opposed to the usual obsession with smartphones.

The smartphone gaming market, especially in Japan, has already matured," said Tomoaki Kawasaki, an analyst at Iwai Cosmo Securities Co. "So having been ignored for a while, dedicated consoles are once again grabbing attention."

It'll be an intriguing month ahead for Nintendo. It's going big with Switch advertising, including a no-doubt pricey Super Bowl ad spot, and the Switch launch will be an important moment for the company. Beyond that, plenty of eyes are on Fire Emblem Heroes as Nintendo's latest foray into smart device gaming.

[via bloomberg.com]