Nintendo Jumps as Investors Anticipate Next-Gen Console Reveal

(Bloomberg) — Nintendo Co. jumped after investors bet poor quarterly earnings would spur the company to focus on its next-generation console.
Shares of Nintendo rose as much as 5% on Wednesday, the biggest intraday rise in a month, after the company reported its fifth straight quarter of profit declines. The Kyoto-based company also cut its full-year profit and sales forecasts, noting that its Switch console is in its eighth year on the market.
The company’s struggled to maintain sales of game hardware and software as consumers await an announcement on a successor for the Switch. Nintendo President Shuntaro Furukawa has said that the company would announce details of a new console before the end of the business year to March. 
On Tuesday, Nintendo slashed its operating profit outlook by 10% to ¥360 billion ($2.4 billion) and said it now expects to sell only 12.5 million units of the Switch this fiscal year, versus a previously forecast 13.5 million units. It’s a rare admission of sluggish game sales before the all-important year-end shopping season. For the September quarter, Nintendo’s operating profit fell a bigger-than-expected 29% to ¥67 billion. 
The outlook cut is a buying opportunity, according to a note to investors by Jefferies analysts Atul Goyal and Shunki Nakamura. The stock price will be driven by reception of the next Switch, they said.
“The Switch is at the end of its shelf life, and even software sales are weak,” said Toyo Securities analyst Hideki Yasuda. 
The Switch faces sleeker and more powerful updates from rivals Sony Group Corp. and Microsoft Corp.
–With assistance from Alice French and Debby Wu.
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