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Nintendo says it’s open to merger or acquisition

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Nintendo president Satoru Iwata (AP Photo/Koji Sasahara, File)

Nintendo owns one of the most enviable stable of characters in the video game world, but no one is envying the sad state of the company’s flagship Wii U home console.

In response to significant losses and frustrated shareholders, the company that has created so many icons says it might be open to buying others -- or perhaps even merging its portfolio with someone else.

In a talk with Japanese newspaper The Nikkei, Nintendo president Satoru Iwata says he's open to mergers and acquisitions, a dramatic philosophical change for the company.

"We should abandon old assumptions about our businesses," he said. "We are considering M&As as an option. For this reason, we'll step up share buybacks."

Don't expect Nintendo to be snatched up by anyone anytime soon, though. Iwata noted the company's extensive cash reserve and it recently announced a $1.2 billion stock buyback.

However, he said, the demands of being a public company have worked against Nintendo over the past few years. And he confirmed that Nintendo's forecasting skills aren't the greatest, something analysts have been complaining about for years.

"Quarterly earnings reporting is not a good fit for Nintendo," he said. "We don't know in advance how much of a hit a product can be. Even when we make plans thinking that a goal is reachable, sometimes things don't go well and this ends up upsetting (shareholders). But it is thanks to the stock market that Nintendo has grown to what it is today. I don't want to turn to a management buyout just because we are inconvenienced now."

Nintendo is planning several radical departures from its previous business strategy in the coming year, it said in an investor meeting yesterday. It's planning a closer look at the mobile market and announced a new initiative focusing on healthcare via "non-wearable" fitness technology.

Iwata tells The Nikkei the company decided on these changes after realizing it had been standing still in a fast-changing industry.

"Nintendo has undergone continuous changes over years, moving from Hanafuda playing cards to video games, and offering newer systems like the Wii," he said. "But we've been preoccupied with a fixed idea of what a game should be like. The game industry is at a turning point amid new developments like the rise of smartphones."

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