Shares in Nintendo are set to rocket with bids marking stock up by more than 21%
Tokyo - AFP
Nintendo shares zoomed up more than 21 percent Wednesday after the videogame giant said it will enter the booming market for games on smartphones, in a U-turn long sought by investors.
Traders pounced with buy offers overwhelming sell offers, sending the putative asking price up 21.3 percent on Tuesday's close to 17,080.0 yen -- hitting the daily stop limit of 3,000 yen.
The broader market was flat.
Nintendo, based in the ancient city of Kyoto, announced Tuesday it was teaming up with Tokyo-based mobile gaming company DeNA to develop games for smartphones.
The maker of the Super Mario and Pokemon franchises plans to buy 10 percent of DeNA for 22 billion yen ($181 million) with the pair set to create games based on Nintendo's host of popular characters.
Investors had been hoping Nintendo would venture into the expanding market but the company has -- until now -- stuck with a "consoles-only" policy, noted Kenji Shiomura, senior strategist at Daiwa Securities.
"Now they are finally stirring and... the market likes it," he said.
Even with Wednesday's stellar gains, Nintendo's stock is still a long way off where it once was. The issue had lost around 70 percent since June 2007 when Apple's iPhone made its debut.
"Finally Nintendo has turned a corner and embraced a huge strategic shift," Atul Goyal, an analyst at Jefferies Group LLC in Singapore, said in a report, as he raised his recommendation on the stock to "buy".
"We have been waiting for Nintendo to make this move and this will offer large upside."
DeNA was also poised to rise by the daily limit in Tokyo.
- New customer base -
Shares in the Bank of Kyoto, the fifth-largest investor in Nintendo, surged 15.47 percent to 1,433 yen.
Nintendo and DeNA did not release any details about which characters would be made available to play on smartphones or tablets.
But Nintendo's president Satoru Iwata said the two companies will launch at least one game this year, and added that the tie-up would help tap a new customer base.
"The world is changing, so any company that is not coping with the change will fall into decline," he told a Tokyo news conference.
But Iwata added that the announcement did not mark a move away from consoles, saying Nintendo would release a new system as a successor to its Wii U home console, which came on to the market in late 2012.
Nintendo has struggled as rivals Sony and Microsoft outpaced it in console sales by embracing hard-core gamers. But all three have suffered at the hands of a trend toward cheap -- or sometimes free -- downloadable games for smartphones and other mobile devices.
Sony on Tuesday said its net profit for the three months to December more than tripled from a year earlier, while confirming it was on course to incur an annual loss smaller than expected last year.
Robust PlayStation console businesses helped improve Sony's earnings along with a weak yen, increased sales of smartphones, and image sensors for cameras, Sony said.
-- Bloomberg News contributed to this article --