Nintendo announced a 10-to-1 share split on Tuesday as the Japanese gaming giant sought to make its shares more attractive to retail investors.

Shareholders have been calling for a split in the shares for some time to increase the liquidity of the gaming giant’s shares. This move will take effect on October 1 this year, when each share of ordinary shares will be divided into 10 shares.

A number of major technology companies, including Apple and Amazon, have announced a split in the past few years. They do not fundamentally change the company in any way, but they make a share cheaper, which can make them more attractive to retail investors.

The division of shares is usually positive for the company’s share price. Shares of Nintendo have risen 5% since the beginning of the year, although other major technology companies are losing billions of dollars this year amid a sharp sell-off of risky assets.

The Kyoto-based company also announced plans to repurchase shares worth 56.36 billion Japanese yen ($ 432.9 million). The deal will take place on Wednesday.

Tensions in the supply chain hit Switch’s sales

The surprising announcement of Nintendo’s share split came when it reported gains for its fiscal year ended March 31. Revenue amounted to 1.69 trillion Japanese yen, down 3.6% year on year. Net profit fell 0.6% to 477.6 billion yen.

Part of this weakness is due to a drop in Switch sales, although the company launched a new OLED (organic light emitting diode) model in the fiscal year. Sales of the console range amounted to 23.06 million units last fiscal year, down 28.83 million in the previous 12 months.

Nintendo said Switch sales were “affected by a shortage of semiconductor components and other parts.”

The Japanese giant forecasts sales of 21 million Switch units in the current fiscal year, which ends in March 2023. This is a decline of 9% on an annual basis.

Nintendo has warned that if Covid-19 restrictions interfere with production or transportation, it could affect product delivery. The company also said that the production of products may continue to be affected by difficulties in purchasing parts such as semiconductors.

Game sales remain strong

Despite the decline in Switch sales, console players continued to buy Nintendo games. Software sales increased 1.8 percent in the last fiscal year, driven by demand for popular games, including Pokemon Legends: Arceus and Mario Kart 8 Deluxe.

Nintendo said it now has 100 million annual gaming users. The Japanese giant has a strong portfolio of acclaimed characters and games that it has benefited from throughout its history. Meanwhile, Sony and Microsoft have tried to build their so-called primary games by acquiring game companies or setting up their own studios.

Nintendo said sales of its Switch gaming console fell during the fiscal year ended March 31 due to supply chain constraints, including a shortage of semiconductors. The Japanese gaming giant expects a new decline in Switch sales through the financial currency.

Behruz Mehri | AFP | Getty Images