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Nintendo Reports Losses

by Michael Cole - October 3, 2003, 3:55 pm EDT
Total comments: 8 Source: Yahoo! News

Mario isn’t the only thing in red right now.

Nintendo has projected a net loss for the first time in its publicly-owned history. Earlier today, Nintendo regrettably informed its investors that instead of the 15 billion yen profit predicted earlier for the fiscal half-year, the company expects to suffer a loss of 3.0 billion yen (around $27 million). Nintendo is currently 7 million yen into the red.

Nintendo blames much of the losses on the unexpected appreciation of the Japanese yen, citing roughly 40 billion yen in foreign exchange losses for the time span. Nintendo also disclosed it had originally planned to reduce the GameCube’s price earlier in the year, and expects the new price to vastly improve sales during the holiday season.

Despite the disappointing news, Nintendo remains confident in its business strategy and estimates a 60 billion yen profit for its full fiscal year ending in March—only five billion yen short of its previous goal.

Cube Sales Go Through the Roof

Four times the sales than before, says Nintendo, though they don't give specifics.


Price Cut Sends Nintendo GameCube Sales Soaring

REDMOND, Wash., Oct. 2, 2003 – Sales rates of Nintendo's GameCube™ home video console have more than quadrupled since a price reduction to $99.99 last week.

"Clearly, this move is what game players desired, and also what our retail partners wanted," says George Harrison, senior vice president, marketing and corporate communications, Nintendo of America. "We're already receiving requests for additional shipments of Nintendo GameCube systems between now and the holidays."

"The price cut is working great!" stated Dan DeMatteo, president, GameStop Corp. "Our sales of Nintendo GameCube have increased more than fourfold. We are currently increasing our shipment requests for the system throughout the holidays."

The new $99.99 MSRP for Nintendo GameCube is an aggressive move as Nintendo heads into the holiday season. More than 100 new titles will be available before the end of the year, including the season's most-anticipated title, Mario Kart®: Double Dash!!™

In addition, Nintendo has just announced a massive marketing campaign fronted by a new tag line, "who are you?" More than $50 million will be invested in launching the "who are you?" campaign, part of a total marketing push of $100 million through the end of the year.


KnowsNothingOctober 03, 2003

Oh poo.

PIACOctober 03, 2003

hmmm, so a combination of weak sales and strong yen is to blame? damn economy

nolimit19October 03, 2003

i hate to say it but...beggining of the end???? i mean it was one thing to hear all the doom in gloom in light of all the mass profits, but now nintendo is in the red for the first time. i do not have the same confidence in nintendo that i had yesterday. and for those who seem to not care about nintendo...i think you are dumb. we live in a world where big business rules. nintendo may easily be swallowed up by another company and we will see if care then. idiots

Michael8983October 03, 2003

Nintendo still expects to make a HUGE profit overall for the fiscal year which it will add to the massive amount of money it already has in the bank.
So I don't think there's anything to be worried about. Sounds like this whole thing has more to do with the economy than anything else. Seems like all companies (especially Japanese ones) are struggling these days and Nintendo is doing great in comparison.

"we live in a world where big business rules"

Nintendo IS big business. Maybe not as big as MS or Sony but Nintendo is the kind of company that should be expected to do the swallowing and not be swallowed itself. Nintendo certainly has the money/power to do it. The only thing stopping it seems to be its philosophy against it.

DjunknownOctober 03, 2003

How odd indeed. From boasting quadruple sales of hardware in the U.S.A, to now being in the red zone. Talk about a roller coaster!

Unless I'm dead wrong, Japan's economy has been down since the early 90s (Any economists or business majors care to clarify why?). So as mentioned earlier, Nintendo has done alright despite this.

If there's one thing that makes Nintendo unique, is that they do things their way, from the hardware ( Propriety discs on the 'Cube and the upcoming wireless adapter for SP is propriety as well.), to the software, to their business practices. Its not they won't swallow up companies, its just they wouldn't leave them intact; they would be molded in Nintendo's image. That takes yen and effort. (The opening of their Tokyo branch is an example, they didn't just open up shop, they were extensively trained in the art of Nintendo.) And I'm sure Silicon Knights and Retro Studios were given not a crash course of Nintendo 101, but a full, extensive lesson on Nintendo's MO.

When you do swallow up companies you also get their baggage, such as previous debts. The swallow'er' hopefully has the resources to fix up the swallow'ee'. (W/o getting too off topic, When Air Canada bought out Canadian Airlines, they got their problamatic management and debts. Air Canada in turn has been unable to fix all their problems, leaving them in a jam.)

While that may be a farfetched example, its a guideline of how just buying up companies won't fix the problem. Since 'Cube sales have been on the rise in such a short time, by the end of the fiscal year should show some great profits. I don't see Nintendo rolling over and dying anytime soon.

KDR_11kOctober 03, 2003

I think those quad sales don't count into the timespan this loss was caused in. Also USD27M isn't that bad, it's peanuts compared to the penalty N had to pay for price fixing in the EU (EUR180M).

RABicleOctober 04, 2003

27 Million aint very much money for a big multinational company. Thats like how i dropped $4 out of my wallet. I'll get over it.

Nintendo posting their first losses kind of reminds me of the company I work for. We were a darling of the tech sector and we were expanding at an alarming rate (at one point we were hiring 11 people a week - insane for a company that's plateaued at 1200 employees).

We were one of the fastest growing companies in the country, we made the Fortune lists, everybody loved us, our stock was high, etc. Then the dotcom bubble burst and the economy tanked. Our customers cut their budgets and nobody was buying our products. For the first time in the 5-year history of the company we started taking losses and laying people off (which was shocking, because the way things were going we naively thought nobody would ever get laid off). That was two years ago and we're still here, clawing our way back to the top.

My point is that no company is bulletproof. Heck, IBM was heavily in the red in the nineties and they've come back. Same for almost every car company out there. When you get to the business levels of Microsoft, Sony and Nintendo it isn't a sprint, it's a marathon. When Nintendo starts posting million-dollar losses for four quarters in a row (see Sega) that's when it's time to get concerned. And even if that happens they have huge cash reserves to bail themselves out.

You also can't overlook Nintendo's pride as a company. Video games are all they do and they won't go quietly. Their newly-announced $50-million advertising budget is proof of that.

Not to worry. Go play Viewtiful Joe and be happy - that's what I plan on doing.


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