Nintendo's US$6b rally risks overvaluing phone push
Shares soar 36% after plans for new games for phones, tablet computers
Tokyo
NINTENDO Co's US$6 billion rally risks overvaluing its long-awaited first steps into the market for smartphone games. The shares soared 36 per cent in the two days after president Satoru Iwata reversed his stance and announced plans to develop new titles for phones and tablet computers. The stock fell in Tokyo on Thursday after closing at 19,100 yen, 36 per cent above the 12-month average price forecast of 17 analysts compiled by Bloomberg.
"The market has told us they favour this move, but I think the share price may reflect over-optimism in their potential to generate profits in a highly competitive area," said Michael Pachter, an analyst at Wedbush Securities in Los Angeles who recommends holding Nintendo shares. "They are doing the right thing, but it may be difficult for them to execute."
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