Japanese Stocks Slump on Nintendo Earnings, Nomura Downgrades
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Japanese stocks fell, reversing earlier gains, after Nintendo Co.'s first-quarter earnings failed to impress analysts and investors, and Nomura Holdings Inc. lowered ratings on auto-parts makers on slowing car sales.
Nintendo, the maker of the Wii video game machine, plunged the most in six months after leaving profit forecasts unchanged in spite of 34 percent first-quarter profit growth. Denso Corp., the nation's largest auto-parts maker, slumped the most in a year after Nomura cut it to ``neutral.'' Mobile-phone leader NTT DoCoMo Inc. rose to a six-month high after quarterly profit jumped 41 percent.
``Exporters are suffering the most and it's evident in their earnings announcements,'' said Tetsuo Inoue, chief strategist at Proud Asset Management Japan Co. ``On the plus side, demand for shares is on the rise.''
The Nikkei 225 Stock Average sank 78.93, or 0.6 percent, to 13,288.86 at the 11 a.m. break in Tokyo, after gaining as much as 0.8 percent. The broader Topix index lost 12.62, or 1 percent, to 1,290.37, and is set for a 2.3 percent drop in July. Twenty-two of 33 industry groups on the Topix retreated.
Japan's government said last week exports fell for the first time in more than four years in June, a sign that overseas demand will no longer prop up the nation's weak consumer spending. Industrial production has fallen for two straight quarters, an occurrence that has coincided with Japan's last three recessions.
`Modestly Disappointing'
Nintendo sank by its daily limit of 5,000 yen, or 8.7 percent, to 52,600 yen in Osaka after reporting a 34 percent jump in first-quarter profit. Sales of the company's portable DS player slumped 72 percent in Japan from the previous year, while Wii sales also dropped.
``We think the company needs to step up efforts in Japan, where Wii and DS hardware sales are declining,'' Soichiro Fukuda, an analyst at Nikko Citigroup Ltd., wrote in a note to clients.
Jay Defibaugh, a Tokyo-based analyst at Credit Suisse Group, said Nintendo's first-quarter results were ``in line to modestly disappointing'' in a note to clients.
