Yesterday shares in Nintendo dropped below 15,000 yen to 14,460 yen, a low for the year. This was thought to be due to concerns the rising yen will slice into overseas sales and the value of its hefty dollar-based assets.

Hopes are high though that tomorrows release of the eagerly-awaited Super Mario Sunshine will boost sales, and consequently profits and share values. I certainly wouldn't bet against it.

Here's the Reuters article:

TOKYO (Reuters) - Shares in Japanese game maker Nintendo Co. dropped below the key 15,000 yen level to a 2002 low on Wednesday, hit by concerns the rising yen will slice into overseas sales and the value of its hefty dollar-based assets.

Shares in the world's second-largest home game console maker and largest game software maker fell as low as 14,760 yen -- its lowest intraday level this year -- before recouping some losses to end at 15,000 yen, down 0.2 percent.

The third straight day of declines reflected concerns that the rapid rise in the yen, on top of recent price cuts for its GameCube game console, would dent earnings.

"Nintendo's earnings are highly sensitive to currency fluctuations. A one-yen rise against the dollar would hit its earnings per share by 40 yen for this year," said Ken Uryu, senior analyst at Merrill Lynch.

"For investors, many of whom are foreigners, Nintendo stock still does not look cheap by valuation."

Shares in Nintendo, 36.7-percent owned by foreign investors as of end-March, last traded below 15,000 yen in September 2001 after the September 11 attacks on the World Trade Center and the Pentagon.

Growing wariness over the strengthening yen has sent its share price down by 35 percent this year, while the key Nikkei average has slipped 23 percent.

In the wake of the yen's jump, Daiwa Institute of Research slashed its forecast for Nintendo's group net profit in 2002/03 on Wednesday to 42 billion yen ($362.3 million) from a previous estimate of 73.5 billion yen.

Daiwa senior analyst Eiji Maeda said the revised earnings estimate is preliminary and based on an assumption of a dollar/yen rate of 115 yen, against the previous 125 yen.

In May, the creator of Pokemon games forecast a group net profit for the year through next March of 90 billion yen, and a net profit for the first half of 2002/03 of 18 billion yen with an assumption of a dollar/yen rate of 130 yen.

Some analysts expect Nintendo to fall into the red on a net and current profit basis for the first half of 2002/03 unless the firm -- generally reluctant to hedge currency risks -- hedged more than usual or switched some of its dollar assets to yen.

HOPE FOR MARIO SUNSHINE

Nintendo generates nearly 70 percent of sales outside Japan and holds hefty foreign-currency-based assets, making it vulnerable to exchange-rate fluctuations.

As of end-March, the company held dollar-based assets worth $3.4 billion and euro-based assets worth 17.7 billion euro ($17.89 billion).

The biggest hope for the Kyoto-based company may be its much-hyped new game "Mario Sunshine," due for release on Friday.

The latest title in its cash-cow Mario series is made for the GameCube, currently doing battle with Sony Corp's PlayStation 2 and Microsoft Corp's Xbox consoles for market dominance.

Accumulated sales of the Mario series have topped 160 million units worldwide since the first, "Super Mario Brothers," was released in 1985.

"Our year starts with Mario, ends with Zelda. We will make aggressive promotions for them," a company spokesman said.

Nintendo will launch a new game in its popular Zelda series in December at home followed by the U.S. launch in February.

Analysts say the success of Mario and Zelda has been factored into the share price to some extent, but higher-than-expected demand would help support its share price.