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Nintendo baffled by share price slide

Iwata feels 10% drop "very strange," but analysts appear divided on Wii U

Nintendo share prices have continued to decline in the wake of the Wii U announcement earlier this week, diminishing by a further 4.7 per cent on June 8.

This follows a 5.7 per cent drop on the day immediately after the reveal of its new home console, which left Nintendo stock prices at their lowest in five years. While yesterday is yet to close in the US, current figures suggest a further decline of 3 to 4 per cent.

Nintendo itself claims to be flummoxed by its share slump, with CEO Satoru Iwata telling Reuters that "Honestly speaking, the reaction to (Tuesday's) presentation and what I heard from people I met and the mood of the convention did not chime at all with what happened in the stock market.

"It's very strange."

There is historical precedent for this, similar having occurred in the wake of the Wii's initial announcement, with Iwata claiming that in both cases it was a matter of observers not having used the new technology themselves.

"In the end, it is easy to get the mistaken impression that this is just a game console with a tablet. People who came to the presentation and tried it out have understood very well that it opens up a lot of new possibilities. But people who have not tried it will find it hard to believe that this controller will change things."

Multiple analysts have offered different takes on the prospects of the Wii U, although the response has been broadly positive, if cautious. Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, told the Wall Street Journal that "The product itself is not bad," but Nintendo may have suffered because "market expectations had been far too high... "It is also a reflection of structural issues caused by a transformation within the market."

Meanwhile Panoptic Management Consultants analyst Asif Khan told Industry Gamers that the issue may be that "Put very simply, investors hate uncertainty. With the Wii U announcement, the investing community has no information on release dates, price, components, specs, and even some features seem up in the air."

He added that "I also think that the Wii U controller looks weird to someone who has not had a chance to play with it. Most investors have not had a chance to hold the device and the software demos were limited in their scope.

"This kind of negative response by investors is not shocking, and I have been viewing it as a buying opportunity for myself and clients."

The price of the Wii U has yet to be revealed, although Iwata has suggested it is likely to be in excess of ¥20,000 ($250/£150).

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Alec Meer

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A 10-year veteran of scribbling about video games, Alec primarily writes for Rock, Paper, Shotgun, but given any opportunity he will escape his keyboard and mouse ghetto to write about any and all formats.

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