Bloomberg News

Nintendo Completes Buyback as Founding Family Sells Shares (1)

February 04, 2014

Nintendo Offices

A man walks in front of the Nintendo Co. logo outside the company's offices in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg

Nintendo Co. (7974), the world’s biggest maker of video-game machines, completed its 114 billion-yen ($1.1 billion) share buyback today as members of the founding Yamauchi family sold some of their holdings.

The company bought back 9.5 million shares, or about 7.4 percent of its outstanding stock, at yesterday’s closing price of 12,025 yen apiece, according to the website of the Tokyo Stock Exchange. The heirs to former Chief Executive Officer Hiroshi Yamauchi, who owned about 10 percent of the total shares before his death in September, sold some of their stake, the company said in a separate statement.

Nintendo announced the buyback as President Satoru Iwata seeks new hit products after the Wii U console flopped with consumers. The Kyoto, Japan-based company shocked the market in January when it forecast a surprise annual loss, cut sales projections for hardware and games, and said it’s considering a new business model.

Yamauchi, who ran the company for 53 years, gave his stake to his four children after his death. The heirs have to pay taxes on the stock they inherited, the company has said.

The company doesn’t know which family members sold stock in the buyback and exactly how many shares they sold, Nintendo said by e-mail today.

Nintendo, which had about $8.6 billion of cash and equivalents and zero debt as of Sept. 30, is seeking to reassure investors it has a plan to fix its ailing console business. Since reaching an all-time high share price of 72,100 yen in November 2007, the company has lost more than 80 percent of its value.

Game Boy

Nintendo fell 1 percent to 11,900 yen as of the close of trade in Tokyo, compared with a 4.8 percent drop in the benchmark Topix index.

The company is studying new ways to revive sales after previously ruling out licensing franchise characters such as Mario and Zelda for online games or smartphone applications.

When Iwata was appointed in 2002, he became the company’s first president from outside the Yamauchi family since it started selling cards in the late 19th century. Iwata subsequently tripled revenue by introducing such hits as the Game Boy Advance SP, the Wii and the Nintendo DS handheld player.

Yet the casual gamers who made Nintendo the leader of a $93 billion industry have abandoned the Wii U for cheap downloads they can play on a Samsung Electronics Co. (005930) Galaxy smartphone or an Apple Inc. iPad. The Wii U also lost its appeal to many dedicated gamers, who prefer the Sony Corp.’s PlayStation 4 or Microsoft Corp.’s Xbox One.

Xbox, PlayStation

Net income plunged 77 percent in the third quarter ended Dec. 31 to 9.6 billion yen, according to figures derived from nine-month totals announced Jan. 29. Operating profit fell 6.9 percent to 21.7 billion yen.

Nintendo sold 2.4 million Wii U units in the nine months ended Dec. 31, the company said. Sony last month said it sold 4.2 million units of its PS4 since it went on sale Nov. 15, and Microsoft shipped more than 3 million Xbox One machines.

Iwata is taking a 50 percent pay cut from this month until June, while other directors will take reductions of as much as 30 percent. The 54-year-old president has said he won’t step down and has no plans to change managers in the near term.

To contact the reporter on this story: Takashi Amano in Tokyo at tamano6@bloomberg.net

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


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