Jul 26, 2016

    Nintendo's Pokemon warning hits shares


    SHARES in Nintendo plunged yesterday after it warned that the Pokemon Go mania sweeping the world would not translate into bumper profits, taking the wind out of a dizzying rally that saw the firm's value more than double.

    The stock dived 17 per cent to 23,405 yen by the break after the Kyoto-based firm warned on Friday that the hugely popular game would have only a "limited" impact on its bottom line.

    Markets had cheered the app's global success as a great sign for Nintendo's nascent move into mobile games.

    That sent it soaring as investors bought the narrative, pushing it above 30,000 yen at one stage - and briefly making the firm more valuable than Sony.

    But analysts had warned that the rally was overdone since the actual impact of the game on Nintendo's finances would be moderate at best - a point it confirmed on Friday.

    Nintendo is the creator of the Pokemon franchise but the game, released on July 5, was developed by US-based Niantic. The Japanese firm's affiliate, Pokemon Company, is on track to receive licensing fees.

    Nintendo has invested in Niantic and owns about one-third of the Pokemon Company.

    It also stands to make money from a device to be used with the app called Pokemon Go Plus but "the income reflected on (Nintendo's) consolidated business results is limited", it said.

    "Taking the current situation into consideration, the company is not modifying the consolidated financial forecast for now," the statement said.

    Since its launch, Pokemon Go has sparked a worldwide frenzy among users.

    It was seen as a shot in the arm for Nintendo - which also created the Donkey Kong, Super Mario and Legend Of Zelda brands - after it abandoned a longstanding consoles-only policy and opened the door to licensing some of its characters for mobile games.

    "I think Nintendo issued that statement because it was uneasy with how high the shares were rising," said Hideki Yasuda, analyst at Ace Research Institute.