* Gree hits an eight-month low
* Nomura downgrades to 'neutral' from 'buy'
(Adds brokerages' comments, details)
TOKYO Feb 13 Shares of Gree Inc
tumbled 18 percent to an eight-month low on Wednesday after the
social gaming firm slashed its annual earnings forecast, citing
a delay in the release of some game titles and sluggish overseas
After the market close on Tuesday, Gree cuts its operating
profit forecast by 30 percent to 50 billion yen to 60 billion
yen ($537 million to $645 million) from a previous estimate of
74 billion yen to 84 billion yen.
In response, Nomura Securities downgraded its rating on Gree
to 'neutral' from 'buy' and chopped its price target to 1,500
yen from 2,300 yen.
Gree was last trading 16.4 percent lower at 1,135 yen, on
track for its biggest one-day percentage drop since early May.
Rival DeNA Co Ltd fell 3.2 percent to 2,720 yen.
Goldman Sachs said the cut to full-year operating profit
guidance was "larger than expected and surprising."
"Conditions look challenging as higher costs pressure
profits amid weak sales both in Japan and overseas," the
brokerage said in a note to clients.
"Gree benefited from growth in card games in 2011, but
monthly user numbers and ARPU (average revenue per user) were
both weak in 2012. Overseas business has not performed as
The company's six-month operating profit to end-December
fell 23 percent from a year earlier to 30 billion yen.
Gree shares sagged nearly 50 percent in 2012, mainly due to
Japan's Consumer Affairs Agency banning gambling aspects in a
game, known as "complete gacha", which charged users around $3
to $4 to turn over virtual cards to claim rare cards or other
Despite more stringent rules to limit minors from spending
too much money on mobile gaming, Gree said early this month that
it had overcharged 5,624 underage playes nearly 50 million yen
between last April and January.
Users under 15 are only allowed to spend 5,000 yen a month
on the gaming platform, while those aged between 16 and 19 are
only allowed to spend 10,000 yen a month.
($1 = 93.0550 Japanese yen)
(Reporting by Sophie Knight and Dominic Lau; Editing by Richard