Japanese shares slipped on Friday, easing further from a three-month high hit earlier this week, after forecasts of big annual losses from NEC Corp (6701.T), Nintendo Co Ltd (7974.OS) and Nippon Steel Corp (5401.T).
The U.S. Federal Reserve's announcement this week that it would keep short-term interest rates exceptionally low at least until 2014 has helped underpin sentiment, however.
The Nikkei .N225 closed 0.1 percent lower at 8,841.22 in a choppy session, though it was up 0.9 percent for the week -- its third straight week of gains.
The benchmark is up 4.6 percent this month, and if the index were to finish with its current gains, it would be the best January performance since 1999.
Nintendo and NEC slid, the latest casualties of Apple Inc's (AAPL.O) success with its iPhone.
Nintendo reported a sharp drop in quarterly profit and forecast a bigger-than-expected annual loss as its 3DS and Wii gaming devices failed to shine amid a consumer shift to iPhones and iPads. Its shares ended 4.1 percent lower, after shedding as much as 7.8 percent to hit an eight-year low.
NEC sank 7.1 percent after it warned on Thursday it would cut 10,000 jobs and post a net loss of 100 billion yen ($1.3 billion) for the year ending in March, because of weak demand for its smartphones amid the popularity of the iPhone in Japan.
Apple's success has taken the shine off Japanese electronic and tech companies, which dominated the global industry in the 1980s and 1990s.
Based on Thursday's closing prices, Apple's market capitalization was 74 percent more than the combined valuation of Canon (7751.T), Nintendo, Sony Corp (6758.T), Panasonic Corp (6752.T), Toshiba Corp (6502.T), Hitachi Ltd (6501.T), Mitsubishi Electric Corp (6503.T), Fujifilm (4901.T), Fujitsu Ltd (6702.T), Sharp Corp (6753.T), Tokyo Electron Ltd (8035.T) and Hoya Corp (7741.T).
The broader Topix .TOPX dropped 0.5 percent to 761.13 on Friday. Volume moderated, with 1.93 billion shares changing hands on the main board, down from 1.96 billion shares on Thursday and 2.2 billion on Wednesday.
Stefan Worrall, director of equity at Credit Suisse in Tokyo, said the market remained relatively bullish.
There are the reasons to take profit but at the same time there has been a clear loosening of U.S. monetary policy it seems in the context of those (Fed) forecasts. We continue to see underweight long only positions being normalised, which provides some buying pressure, he said.
NIPPON STEEL DOWN, KOMATSU UP
Hot on the heels of NEC and Nintendo, Nippon Steel, the world's No. 4 steelmaker, cut its annual profit outlook by one-third, as exports tumbled and prices sagged on higher supplies. Its shares dropped 3.5 percent.
Elpida Memory Inc (6665.T) sank 7.1 percent after the Nikkei business daily said the chipmaker is likely to book a roughly 90 billion yen ($1.16 billion) operating loss for the April-December period amid eroding memory chip prices.
Out of the 13 Nikkei companies that have reported quarterly figures so far, nearly 70 percent of them came in below market expectations, Thomson Reuters StarMine data showed. That compares with 35 percent of S&P 500 .SPX companies.
Although Japan's corporate earnings results have been disappointing so far, the pace of deterioration of the Topix's earnings momentum -- analysts' upgrades minus downgrades as a percentage of total estimates -- moderated to minus 4.8 percent from December's minus 8.1 percent, Thomson Reuters I/B/E/S data showed, signaling a less gloomy outlook for companies.
We are looking at a market here in Tokyo with 71 percent of stocks trading below book and with half of stocks trading below five times EV/EBITDA ... You are practically giving away stocks in Japan, said Nicholas Smith, Japan strategist at CLSA.
It's amazing that there is a breath of decent news (U.S. economic indicators) and Tokyo is not up more.
Komatsu Ltd (6301.T) gained 1.5 percent after U.S. peer Caterpillar (CAT.N) reported a 58 percent rise in quarterly earnings on record sales of construction and mining equipment, and forecast strong growth for this year.