Stronger yen yanks Nintendo shares down

Though it is the bane of Yankees traveling abroad, the weak dollar has helped prop up the US economy by keeping American exports attractively cheap. A similarly weak yen has also helped keep the price of Japanese exports down in external territories--exports like the Nintendo Wii, which remains hard to find in North America.

Today, though, a resurgent yen has stung Nintendo, which does nearly 70 percent of its business abroad. The Bloomberg news service reports that the Kyoto-based game giant's shares sank 5.4 percent to 51,000 yen ($446.31) this afternoon on the Osaka stock exchange. The one-day dip came after a steady climb in Nintendo's share price, which had been up nearly 65 percent for the year.

The fall was prompted by only a small exchange-rate change, which went from 114.12 yen to 114.27 yen to the dollar in the last 24 hours. JPMorgan analyst Eiji Maeda told Bloomberg that, because of its reliance on sales in North America and Europe, Nintendo is particularly susceptible to currency fluctuations. According to his estimates, a one-yen gain against the dollar could cause the Mario Factory's stock price to shrink 400 to 600 yen ($3.50 to $5.25) per share. As such, Maeda rates Nintendo stock as "overweight"--a rating reserved for companies whose share price is higher than their earnings merit.

Ironically, today is one month after Nintendo increased its earnings projections a dramatic 40 percent to 245 billion yen ($2.14 billion). But whatever the exchange rate, last month's NPD report saw the company dominating the console and handheld market, with some 425,000 Wiis and 405,000 DSes sold in the US.