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 The stock ended limit-up, or 21 percent, at 17,080 yen ($141), a day
after Nintendo said it would develop mobile gaming apps with online
gaming firm DeNA Co.
It was the stock's biggest daily gain since Nintendo became public
in 1983, adding some $4 billion to the company's market
capitalization. Nintendo is now worth $24 billion.
"Finally, Nintendo has turned a corner and embraced a huge strategic
shift," said Jefferies analyst Atul Goyal, who raised his
recommendation on the stock to "buy" from "hold" and its price
target to 30,000 yen from 12,400 yen.
Investors have long called on Nintendo, makers of the Wii U and the
portable 3DS, to shift its focus to mobile devices after losing
customers to both smartphone gaming app makers and console rivals
like PlayStation maker Sony Corp and Xbox maker Microsoft Corp.
The company had so far resisted these calls, pinning hopes on hit
games such as "Mario Kart 8". But in January, it halved its
operating earnings target for the current fiscal year to 20 billion
yen ($169 million), citing weak 3DS sales.
The move into smartphone apps could further dent console sales, some
analysts said, despite assurances by President Satoru Iwata that
Nintendo was committed to making gaming machines.
Nintendo, however, may be shifting away from hardware, with Iwata
saying it was developing a new gaming platform, the NX, as well as
an online membership service to be launched this year.
"Nintendo is not in a position to simply drop its legacy console
businesses given the investments made in software," said CLSA
analyst Jay Defibaugh. "But the writing is on the wall."
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Defibaugh forecast Nintendo to exit the console business in three to
five years.
Before the tie-up with DeNA, Nintendo's shares had fallen over 30
percent in the past four years, lagging a more than doubling in
Tokyo's benchmark Nikkei index.
DeNA shares, heavily shorted prior to the announcement, also rose on
Wednesday limit-up to 1,707 yen. The company, which mainly develops
games played on browsers, had also lost market share in the past two
years as users moved to mobile apps.
($1 = 121.2900 yen)
(Reporting by Ritsuko Ando, Ayai Tomisawa and Teppei Kasai; Editing
by Miral Fahmy)
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