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Report: Investors Have Oversold Nintendo Shares

Investors nervous about Wii's recent sales performance have prematurely sold off an excess amount of stock, leading to an unjustified drop in Nintendo share price, says financial publication Barron's.
Shares in Nintendo have been "in free fall" since Nintendo announced it would be lowering forecasts for the fiscal year ended in March, Barron's said over the weekend. But according to a Reuters report on the full piece, Barron's stated that investors have prematurely oversold Nintendo shares, leading to an unjustified drop in share price. Barron's said that Nintendo's blistering growth may resume this year. The magazine said investors are ignoring Nintendo's strong balance sheet and other solid aspects of the Kyoto, Japan-based game maker. In January, Nintendo lowered its Wii forecast for the fiscal year by one million units to 26.5 million. At the time, the firm also reduced net income expectations by 33 percent to ¥230 billion ($2.6bn), leading to the drop in share price. A recent surge by Sony's PlayStation 3 in Japan that saw the console surpass Wii sales last month has also contributed to Nintendo investor worries. Comments from Nintendo president Satoru Iwata didn't help matters, as he said earlier this month that "the Wii is in the most unhealthy condition since it hit the Japanese market." Barron's cited analysts who said Nintendo may have beat expectations for the most recent fiscal year ended in March by generating an estimated $5.6 billion operating profit. Fiscal 2010 could see a sharp rise in earnings, analysts said.

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