Nintendo Co. shares have slid as the firm warned that component shortages could affect production and gave a conservative profit forecast for the year, overshadowing better-than-expected earnings for the past quarter.
The Kyoto-based studio forecast a 22% drop in operating profit in the current fiscal year, to ¥500 billion ($4.6 billion), significantly below analysts’ expectations. Nintendo, like many Japanese companies, often begins the year setting expectations low so it has room to upgrade its outlook later.
Shares fell as much as 3.1% in Friday trading in Tokyo following the cagey outlook and chip warning, extending a 6.4% decline for the year. "There has been considerable stock market pessimism about Nintendo’s longer-term prospects,” Citigroup analyst Kota Ezawa wrote in a note after the results. "The possibility is emerging of positives finally drying up.”