Nintendo holds off short sellers with strong game revenues

STRONG game revenues helped Nintendo’s newly installed president Shuntaro Furukawa avoid an awkward debut presenting the Japanese company’s quarterly results as sales of its Switch consoles dropped year on year.

While Nintendo’s earnings and operating profit for the three months to the end of June beat analyst expectations, sales of its Switch video game consoles fell to 1.9m in its first quarter, down from 2m in the same period last year. This brings the total sold since its launch to 19.67m.

Sales of the company’s Labo games kits, which allow players to build cardboard extensions to their Switch consoles, were also lower than expected, at just 1.4m.

The number of Switch games sold in the quarter jumped to 18m from 8.1m last year, helping operating profits rise 88pc to Y30.5bn (£208m) as revenues rose 9pc to Y168bn.

Concerns over a likely dip in sales of the Switch devices, which have been credited with reviving Nintendo’s finances in recent years, have led Wall Street investors to take out large short bets against the company, in the expectation that they would profit from a fall in the shares.

Earlier this week, it emerged that the New York hedge fund Melvin Capital Management had accumulated a $400m (£304m) short bet against Nintendo. Shares in Nintendo, however, only fell 2pc in Tokyo yesterday.

The company has also begun to release smartphone games in recent years, and titles including Super Mario Run and Animal Crossing: Pocket Camp brought in Y9.1bn, unchanged from the previous year.

Nintendo disappointed investors in June at the industry event E3, with the company’s shares falling 7pc following its presentation after it failed to unveil any major developments. In contrast, rivals Microsoft and Sony announced major new games at the event.