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Japan Stocks Drop as Company Profits Disappoint Investors

Japanese shares fell, with the Topix index dropping for the first time in three days, weighed down by earnings results that disappointed investors.

DeNA Co. plunged 20 percent after the social-network firm’s operating-profit forecast missed expectations. NTT Urban Development Corp. fell 8.8 percent after projecting a drop in net income. Konica Minolta Inc. slumped the most on the Nikkei 225 Stock Average after the copier maker said earnings this fiscal year would be less than analysts had expected. NSK Ltd. posted its biggest advance in a year after the bearings maker forecast full-year profit that topped estimates.

The Topix slid 0.7 percent to 1,157.91 at the close of trading in Tokyo, reversing gains of as much as 0.3 percent. The Nikkei 225 lost 0.4 percent to 14,149.52. The yen slipped less than 0.1 percent to 101.90 per dollar, extending a 0.2 percent decline on May 9. Japan’s current-account surplus narrowed more than forecast in March.

“Investors still have one eye on company earnings and macro events,” said Andrew Sullivan, director of sales trading at Kim Eng Securities in Hong Kong. “Nothing is giving a clear direction for markets.”

Earnings seasons continued in Japan, with more than 650 companies on the Topix scheduled to post results this week. Of members that reported from April 1 through May 9 and for which Bloomberg had estimates, 55 percent beat analyst expectations for profit, data compiled by Bloomberg show.

DeNA Plummets

DeNA tumbled 20 percent to 1,302 yen, the biggest drop since November 2011 and the lowest close since 2009. The company forecast a 62 percent decline in first-quarter operating profit as game players shift away from its browser titles. Operating profit will probably be 6.5 billion yen ($63.8 million) in the three months ending June, the company said May 9 in a presentation after the market closed, missing the 10.6 billion yen average estimate of analysts surveyed by Bloomberg.

NTT Urban Development sank 8.8 percent to 836 yen. The real-estate firm forecast net income for the year ending March 2015 would drop by 30 percent to 8 billion yen. Analysts had expected 9.8 billion yen.

Konica Minolta plunged 11 percent to 842 yen, the most since March 2011. The company forecast a 19 percent gain in full-year profit to 26 billion yen, missing analyst predictions for 37 billion yen.

NSK jumped 9.7 percent to 1,145 yen, its biggest advance since May 2013. The bearings maker forecast a 60 percent increase in full-year net income to 50 billion yen, beating the average analyst estimate for about 47 billion yen.

“This week individual stocks will be affected by earnings,” said Yutaka Miura, a senior technical analyst at Mizuho Securities Co. “As there are few catalysts domestically, the market will be easily swayed by external factors.”

Ukraine Referendums

The conflict in Ukraine intensified as pro-Russian groups hailed a large majority in favor of secession in referendums they organized in eastern Ukraine. The votes went ahead amid violent clashes between Ukrainian troops and pro-Russian rebels, and in the face of condemnation from Ukraine, the U.S. and the European Union, which all said the polls were illegal.

Japan’s current-account surplus was 116.4 billion yen in March, the Ministry of Finance reported today in Tokyo, compared with the median forecast of 347.7 billion in a Bloomberg News survey of 25 economists.

Futures on the Standard & Poor’s 500 Index added 0.2 percent after the underlying gauge climbed 0.2 percent on May 9. The Dow Jones Industrial Average rose to a record as Internet shares rallied and retailers gained on earnings.

The Topix fell 11 percent this year, the most among major developed markets tracked by Bloomberg, as investors weighed whether Prime Minister Shinzo Abe and the central bank will succeed in fostering a sustained economic recovery. The Japanese gauge traded at 1.13 times book value today, compared with 2.62 for the S&P 500 and 1.9 for the Stoxx Europe 600 Index on May 9. Volume on the Japanese gauge was 7.1 percent lower than the 30-day average today.

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