Here's what Bloomberg wrote about it. Honestly, I don't know how analysts were expecting more than a billion dollars in profit for Q1.

And I hate Jay Defilbaugh, he's one of the most anti-Nintendo analysts I've seen.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aP9.056Hpny8

Nintendo Shares Fall as Quarterly Profit Disappoints Analysts

By Hiroshi Suzuki

July 31 (Bloomberg) -- Nintendo Co., the world's largest maker of handheld game players, fell the most in six months in Osaka trading after profit missed some analysts' estimates.

Nintendo dropped 6.8 percent to 53,700 yen as of 9:31 a.m. on the Osaka Securities Exchange, while the benchmark Topix index rose 0.2 percent. That's the largest drop for shares of the Kyoto, Japan-based maker of the Wii console since Jan. 28.

The company said yesterday operating profit, or sales minus administrative expenses and costs of goods sold, rose 32 percent to 119.2 billion yen ($1.1 billion) in the first quarter ended June 30, in line with the median analyst estimate in a Bloomberg survey. Nintendo maintained its full-year profit forecast of 530 billion yen.

``We view 1Q results as in line to modestly disappointing,'' Jay Defibaugh, a Tokyo-based analyst at Credit Suisse Group, wrote in a report yesterday.

There was also ``some expectation'' that the company would raise its full-year earnings projections, wrote the analyst, who kept his ``neutral'' rating and 12-month price estimate of 61,000 yen for Nintendo.

they make 1 billion in profits and the stock falls???

then shouldn't the sony and MS stocks be handed out for free?

MS and Sony are more diversified companies than Nintendo. While they're both in the console/game development industry, they do have other departments that determine share worth.

Today's earnings report/market results seem to exemplify this. Nintendo can become a victim of its own success if expectations expand beyond the company's ability to satisfy demand for its products.

"The only real negative I see is they don't seem to be recapitalizing their profits. They are just accumulating cash as far as I can tell."

That's quite a tell for a company focused on one segment of A/V consumer products. An increase in dividends would be have been a big plus for the stock rather than simply dumping it into the war chest.

Just north of $70 seems to be the ceiling for NTDOY with an average closer to $65. But... I'm still going to keep it in my portfolio through Q4 although it looks like the biggest gains have already been realized.

The stock has dropped to 52,800 yen! What's the sense in this??

EDIT - looking at some news items, it seems that some analysts are making a big deal out of DS's "dip in sales".

EDIT2:

http://www.forbes.com/afxnewslimited/feeds/afx/2008/07/30/afx5273129.html

"Nintendo  (other-otc: NTDOY.PK -  news  -  people ) reported a 31.5 percent rise in first-quarter operating profit on strong demand for its home-use video game consoles and game software. But it left unchanged its year to March 2009 earnings guidance, citing an uncertain outlook for sales during the Christmas and year-end sales period, which accounts for the bulk of its annual sales."

Most Japanese companies are very aggressive at raising guidance and ramping up production to meet demand. It is a foregone conclusion that anyone wanting to put a Wii under the Xmas tree better buy it now. Even worse, by not raising guidance Nintendo abandoned its investors.
I thing Nintendo is a good investment, but it is run like it is a utility.

@EllensProphet: In the current economic climate and with all the uncertainty over Iran and oil, it's hard to blame them for not being even more aggressive. Their annual shipments forecast is already pretty high at 25 million.

Sooner or later the stock price will correct, barring any disaster.

I just think the reaction was extreme. They are treating it like the company was indicted for fraud or something. I just don't think the forward outlook was worthy of that kind of extreme panic selling. I can understand some selling, but not that kind of sky is falling type of selling, as if the company posted shockingly bad results.

@FishyJoe: Definitely too extreme, now I'm wondering when the correction will happen. Gradually, or only when a new (or several) report comes out?

Regarding their cash pile, maybe they'll accumulate so much that they'll pay off a special dividend at some point. Microsoft did it when they had tens of billions in the bank.

Like Microsoft, I don't see them spending all that money.

Loss of 7.42% at the end of trading today. Lowest since February. Yeegh.

Underlying infrastructure is still good, so the damage is unwarranted. Could be seen as a discount in the current price depending on POV.

August market trends will be vital; it should be back on the ascent leading up to Q3 just going off of basic consumer cyclical trends as well as NTDOY's last year performance.

IMO, now is a good time to buy. The current and forward PE are getting ridiculously low. It's really crazy, prior to the Wii practically nothing would move this stock. Now it seems like the daytraders dream.