Mario Time! Nintendo To Make Smartphone Games

Nintendo is to enter the booming market for games on smartphones - in a U-turn that saw the firm's shares shoot up by 21%.

The maker of the Super Mario and Pokemon franchises says it is teaming up with Tokyo-based mobile gaming company DeNA to develop games for smartphone devices.

News of the decision saw shares trading at a three-and-a-half year high of 17,080 yen (£96), up 21.3 percent, after hitting the daily stop limit of 3,000 yen.

Nintendo plans to buy 10%of DeNA for 22 billion yen (£123m), with the pair set to create games based on Nintendo's host of popular characters.

Investors had long hoped Nintendo would venture into the expanding market but the company had previously stuck to a "consoles-only" policy, said Kenji Shiomura, senior strategist at Daiwa Securities.

"Now they are finally stirring and the market likes it," he said

Despite a national reputation for innovation, companies in Japan often prove stubborn about adapting to changes in their own industry, preferring to stick to what worked before.

Until the firm's about-face, Nintendo was emblematic of this tendency.

President Satoru Iwata had argued that venturing into the overpopulated world of smartphones and tablets risked hollowing out the core business and cannibalising the hard-fought value of their game creations.

Atul Goyal, an analyst at Jefferies Group LLC in Singapore, raised his recommendation on the stock to "buy", saying in a report: "Finally Nintendo has turned a corner and embraced a huge strategic shift.

"We have been waiting for Nintendo to make this move and this will offer large upside."

Nintendo's stock has fallen more than 60% since June 2007, when Apple's iPhone made its debut.