Shares in Nintendo Co Ltd fell nearly 7%, putting them on track for their biggest one-day drop in a year on Wednesday after the Japanese videogame giant cut its annual sales projection for its Switch console by nearly 10%.
The Kyoto-based company on Tuesday cut its sales forecast for the Switch to 19 million units for this business year from 21 million, as microchip shortages constrained production., which this month signalled that supply chain snarls that hampered its games business were easing.
Nintendo President Shuntaro Furukawa told an earnings briefing on Tuesday that chip supply had begun recovering in recent months, helping boost Switch production. The industry is heading into the crucial year-end shopping season. Still, Nintendo shares were down 6.9% in Tokyo trade, against a nearly flat broader market. That put them on track for their biggest one-day drop since October 2021.
"The Switch hardware cycle peaked and we believe that revenues, profits and valuations will now struggle to reach new highs in this cycle," wrote Mark Chadwick, an independent analyst who publishes on the Smartkarma research platform.Nintendo also on Tuesday raised its annual net profit forecast thanks to a weaker yen but missed analysts' consensus forecasts.
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