MCD McDonalds Corp

Videogame maker warns profit boost from 'Pokémon Go' is likely to be limited

By Megumi Fujikawa 

TOKYO -- After soaring over the previous two weeks, shares in Nintendo Co. plunged Monday following a company warning that the smash-hit smartphone game "Pokémon Go" would make a limited contribution to its earnings.

Nintendo shares ended down by the maximum permitted amount, Yen5,000, at Yen23,220 ($218.73) -- a decline of 18%. The company's share price had doubled since "Pokémon Go" was released in the U.S. and other markets this month.

Shares of McDonald's Corp.'s Japan unit, which announced a "Pokémon Go" tie-up last week, also reversed direction Monday, closing 12% lower at Yen3,200.

Based on a Nintendo franchise, "Pokémon Go" is the Japanese videogame maker's first mobile-gaming hit. But it was developed by Tokyo-based Pokémon Co., in which Nintendo owns a 32% stake, and San Francisco-based Niantic Inc. Nintendo and Pokémon Co. both own undisclosed stakes in Niantic.

Kyoto-based Nintendo said after the market closed Friday that it had already factored in any profits from sales of its "Pokémon Go Plus" wearable device into its current forecast of Yen35 billion for the fiscal year ending in March.

The company is scheduled to report its April-June results Wednesday.

Tsutomu Yamada, market analyst at kabu.com Securities, cautioned investors not to be disheartened by the fall in Nintendo's share price, saying the success of "Pokémon Go" would lead to wins for the company, such as sales of new Pokémon titles on Nintendo 3DS planned for November.

"Nintendo is coming out of its recent downturn," he said.

Similarly, McDonald's Holdings Co. (Japan) Ltd., whose shares got a big lift from its tie-up with "Pokémon Go," is still expected to benefit. The company's sales had suffered from recent food-safety problems.

"We think that it is families that have been put off by a string of scandals at McDonald's, and this customer group is also the target market for 'Pokémon Go,'" said Ryozo Minagawa, an analyst at Nomura Securities.

Pokémon Go launched in Japan on Friday and was released in Hong Kong on Monday. The game remains the top free app in Japan on both Apple Inc.'s App Store and Google Play for Android smartphones.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

July 26, 2016 02:49 ET (06:49 GMT)

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