Nexon Drops to Six-Month Low After Cutting Forecast: Tokyo Mover
Nexon Co. (3659) fell to the lowest in almost six months in Tokyo trading after the online games maker cut its sales and profit forecasts, citing slowing demand growth.
The maker of “Dungeon & Fighter” dropped 7.9 percent to 1,138 yen, the lowest level since Feb. 21 on the Tokyo Stock Exchange. The stock fell 24 percent on Aug. 10, a day after the company cut its net income forecast.
“Nexon saw soft demand for most of its franchise games,” Thomas Y. Kwon and Satoshi Tanaka, analysts at Daiwa Securities Capital Markets Co., wrote in a note to clients dated Aug. 10. “Gamer traffic was negatively impacted by rising competition from new blockbuster titles.”
The online game operator is relying on growing sales to players in China, which generated 47 percent of second-quarter revenue, as it partners with Shanda Games Ltd. (GAME) and Tencent Holdings Ltd. (700), the country’s biggest Internet company. China sales grew 38 percent to 10.7 billion yen ($137 million) in the second quarter after jumping 89 percent in the first quarter, according to company statements.
“Based on very early indications in July, we believe that a small downward revision in our full-year outlook is prudent,” Chief Financial Officer Owen Mahoney said in an Aug. 9 conference call. “It was a little bit less robust than we had expected.”
Net income will probably be 32.7 billion yen for 2012, compared with a previous forecast on May 10 for 37.8 billion yen, the company said in a statement Aug. 9. Sales will be about 104 billion yen, 3.7 percent less than its previous estimate.
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