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Nintendo climbs 7 percent after share buyback announcement

A shopper rides the escalator past Nintendo advertisements at an electronics retail store in Tokyo January 20, 2014. REUTERS/Yuya Shino
A shopper rides the escalator past Nintendo advertisements at an electronics retail store in Tokyo January 20, 2014. REUTERS/Yuya Shino

TOKYO (Reuters) - Shares in Nintendo Co Ltd climbed more than 7 percent to a one-week high of 13,850 yen in early trade on Thursday after the video games maker said it would buy back 125 billion yen ($1.22 billion)of its outstanding shares.

"While the market may react positively, we are more cautious," Goldman Sachs said in a note. "The buyback will boost net profits per share by 8.2 percent, but reduce cash and marketable securities per share by 5.8 percent."

Goldman Sachs maintained its 'sell' rating on Nintendo.

The Kyoto-based company is due to unveil a new management strategy later on Thursday as it comes under pressure from investors to return to profit after warning it would post a third straight year of operating losses.

On Wednesday, Nintendo posted lackluster results for its traditionally strongest third quarter after disappointing sales for its flagship Wii U console forced it to slash its annual forecast earlier this month.

(Reporting by Dominic Lau; Editing by Chang-Ran Kim)

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