After admitting to investors last Friday (after the close) that they won’t be able to rely on Pokemon Go to bolster profits, the company came clean this week that a widely anticipated accessory for the blockbuster app will be delayed until September. The effect is simple – Nintendo shares are down 27% this week – the worst week since Aug 1989 (when the exuberance over Super Famicom died).
Thanks to this double Pokemon “no,” Nintendo has lost over $14 billion of market capitalization in the last week.
As Bloomberg details, Pokemon Go Plus, a 3,500 yen ($33) Bluetooth gadget that helps users detect nearby virtual pocket monsters, was supposed to be Nintendo’s one measurable benefit from the explosive popularity of the game. It was set to go on sale in Japan this week, until Nintendo, Pokemon Co. and developer Niantic Inc. pushed back the accessory’s debut.
In addition, the delay will probably force analysts to adjust their estimates, which were already in disarray because of the lack of clarity over how Pokemon Go will impact the company’s bottom line. Nintendo maintained its outlook for 35 billion yen in profit for the current fiscal year when it reported earnings shortly after announcing the delay.
“The delay is disappointing, especially since it’s just a Bluetooth accessory that has already been available for pre-order,” said Atul Goyal, an analyst at Jefferies Group. “The sales will still accrue to Nintendo with a delay. Just as all eyes turn to Nintendo, the company’s management can’t seem to get their communication right.”
Mitsubishi UFJ Morgan Stanley Securities Co. estimated that Pokemon Go Plus would add 45 billion yen in sales and 8.2 billion yen in income to Nintendo for the current fiscal year, based on its original sale date. Analysts at Bank of America Corp. were predicting an extra 10.5 billion yen in profit.
“Is Nintendo really not even capable of producing a low-end accessory these days?,” said Serkan Toto, founder of consultant Kantan Games Inc. “It has now delayed the launch to a time when at least the initial hype around the game will definitely be over. In contrast to Pokemon Go earnings, Nintendo would have pocketed most of the margin for the device.”
While the Pokemon Go Plus delay was announced in Japan and the U.S., it wasn’t clear what the impact would be in other places where the game has debuted.
Maybe The Bank of Japan will buy them? Stranger things have happened.
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