DeNA Falls After Forecasting Profit Drop on Games Slump

DeNA Co. (2432) fell to its lowest in more than four years in Tokyo trading after the Japanese mobile game and social-media service forecast a 62 percent drop in operating profit as players shift away from its browser titles.

DeNA declined 20 percent to close at 1,302 yen in Tokyo, the lowest since November 2009. Operating profit will probably be 6.5 billion yen ($64 million) in the quarter ending June, the company said May 9 in a presentation after the market closed. That lags behind the 10 billion yen average of four analyst estimates compiled by Bloomberg.

The game developer and platform provider built its business on the popularity of games users play via a browser, while many gamers have shifted to app games that play on smartphones or tablets without using a browser. DeNA expects to “maintain and revitalize user engagement” for its browser games, according to its statement.

“DeNA believes the browser business will rebound and hence is not cutting costs significantly,” David Gibson, an analyst at Macquarie Group Ltd. who rates the stock the equivalent of a sell, wrote in a note dated May 9. “We think this is a mistake.”

To contact Bloomberg News staff for this story: Chris Shimamoto in Tokyo at cshimamoto@bloomberg.net

To contact the editors responsible for this story: Teo Chian Wei at cwteo@bloomberg.net Subramaniam Sharma, Dave McCombs

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