Nintendo shares tumble despite stellar earnings

By Kiyoshi Takenaka

TOKYO (Reuters) - Shares in Nintendo Co Ltd (7974.OS) plunged nearly 10 percent on Monday despite strong sales of its Wii game machine helping drive robust quarterly profits, hit by fears that a firmer yen could hurt earnings.

Analysts said the stock also came under pressure as some institutional investors, who had bought heavily into the stock during its meteoric rise over the past couple of years, pocketed profits amid a slide on global share markets.

But they said the shares -- which have fallen by a third in the past three months -- may have been oversold given Nintendo's rising production capacity and strong earnings momentum.

"This has little to do with the company itself, but a lot to do with market sentiment," said Mizuho Asset Management fund manager Yoshihisa Okamoto.

"In the current market environment, investors rush to sell at the first sign of negative developments or exhaustion of positive news."

Shares in Nintendo fell 9.7 percent on Monday, hitting their downward daily limit of 46,800 yen and extending their losing streak to a third trading day.

Nintendo shares had jumped more than fivefold in the two years to last October on white-hot demand for its Wii and DS game machines, zipping past heavyweights including Honda Motor Co Ltd (7267.T) and PlayStation 3 maker Sony Corp (6758.T) in market capitalization.

But the stock has pared one-third of its value since then, battered by the overall stock market downtrend and signs of weakening consumer spending in the United States.