Bloomberg News

DeNA Falls Most Since 2005 Listing as Earnings, Ratings Cut

November 02, 2011

(Updates analyst comment in third paragraph.)

Nov. 1 (Bloomberg) -- DeNA Co., Japan’s biggest social- networking service operator, fell the most since its 2005 listing in Tokyo trading after second-quarter earnings missed forecasts and JPMorgan Chase & Co. cut its stock rating.

DeNA dropped as much as its daily limit of 20 percent and traded 19 percent lower at 2,765 yen as of the 11 a.m. trading break on the Tokyo Stock Exchange. The benchmark Nikkei 225 Stock Average slid 0.8 percent.

“The biggest concern is that DeNA faced its first average- revenue-per-user drop since the company started providing social games,” Hiroshi Kamide, an analyst at JPMorgan in Tokyo, said by phone today. “We view that the hit rate of the business is falling.”

Kamide lowered his rating on DeNA to “underweight” from “neutral” yesterday. He also cut his target price to 2,850 yen from 3,425 yen.

The Tokyo-based social-networking company yesterday reported second-quarter operating profit of 15.4 billion yen ($197 million), missing the average estimate of 16.9 billion yen, according to a Bloomberg survey of 10 analysts.

--With assistance from Yuki Yamaguchi in Tokyo. Editors: Michael Tighe, Garry Smith

To contact the reporters responsible for this story: Kazuyo Sawa in Tokyo at ksawa3@bloomberg.net; Gearoid Reidy at greidy1@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net.


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