The six-year run of increasing profit from Nintendo includes the launch of successful hardware products such as Nintendo DS (2004), Nintendo DS Lite (2006), and Nintendo Wii (2006), all of which have been overwhelming successes for the Kyoto-based company. Aside from a decline in Wii console sales, another factor in the decline in profit has been the strength of the yen, which is reducing the value of Nintendo's overseas sales. Analysts at Morgan Stanley have recently raised their currency exchange value impact projection from 23 billion yen to 37 billion yen.
Nintendo will report their yearly earnings on October 29.
TOKYO, Oct 29 (Reuters) - Nintendo Co Ltd (7974.OS) reported a 59 percent decline in first-half profit on Thursday, hurt by sluggish demand for its flagship Wii videogame console and the strong yen, and it slashed its full-year forecast.
Nintendo, which faces stiff competition in the videogame market from Sony Corp (6758.T) and Microsoft Corp (MSFT.O), said operating profit was 104.4 billion yen ($1.2 billion) in the April-September half, compared with 252.2 billion yen a year earlier.
Nintendo cut its operating profit forecast for the year to March 2010 by nearly a quarter to 370 billion yen, ending a three-year run during which it booked a record profit on booming demand for its Wii console and DS portable device.
That compares with an average estimate of 442.8 billion yen in a poll of 25 analysts by Thomson Reuters I/B/E/S.
Demand for Nintendo products like the Wii has cooled as rival Sony has bolstered its line-up of console games, and as Apple Inc's (AAPL.O) iPhone has become a popular platform for handheld games.
Nintendo's earnings, like those of other Japanese exporters, have also been blunted by the stronger yen JPY=, which eats into overseas profits. Shares of Nintendo have declined about 28 percent so far this year, compared with a 14 percent rise in the Nikkei 225 .N225 share average.
Reuters mentions the competition but never even once the lack of games...
Reuters mentions the competition but never even once the lack of games...
Nintendo top honcho Satoru Iwata has said that Wii's situation in Japan "cannot be defined as healthy". It's probably not as bad as it sounds, they have sold ba-zillions after all.http://computerandvideogames.com/article.php?id=226568
"As you probably know, the current situation of Wii cannot be defined as healthy," he said, detailing this year's decline in Wii sales in Japan to well below the 50k unit sales mark per week.
A spike to almost 100k sales one week in the summer failed to last, and despite a price cut in September, Iwata says: "The price cut seems to have the least impact here than other parts of the world."
He adds: "It is our urgent mission to recover the momentum of Wii during the holidays utilising Nintendo's strength."
DS is propping up Nintendo's bank balance though, as Iwata says the portable continues to do well, thanks to Dragon Quest and Pokémon games.
"The total Japanese market size is less than one sixth of that of the US, and about one fourth of the four major European countries. There exists major differences in market size today," said Iwata.
"When we compare the unit hardware sales, Japanese sales are about two-sevenths of the US, and more than half of the four major European countries. It can be said that Japan today is the challenging market for home console software to sell," he added.
Iwata goes on to reason the Wii's software sales decline. "Since the software we launched at the end of 2008 did not go on to sell for an extended period of time, and we were not able to launch very strong titles in the first half of this year, we have seen a significant drop in software sales this year. As a result Wii Software unit sales share is just below 50 percent of the entire home console software market so far in 2009."
New Super Mario Bros. Wii is out here on November 20. That should sort things out.
