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Nintendo slashes employee bonuses following first annual losses - report
Nintendo slashes employee bonuses following first annual losses - report
June 12, 2012 | By Mike Rose

June 12, 2012 | By Mike Rose
More: Console/PC, Business/Marketing

Newsbrief: Nintendo plans to cut the summer bonuses of its employees following the company's first ever annual losses, according to media reports.

According to Japanese newspaper Nikkei, and as reported by Reuters, Nintendo is set to reduce all employee bonuses this summer by 20 percent as a result of its weak business performance. The move echoes pay cuts taken by Nintendo executives last year, after the company's expected financial forecast was reduced.

In April, the company posted revenues of 647.7 billion yen ($8.0 billion), down 36.2 percent compared to 1 trillion yen ($12.3 billion) year-over-year, and losses were 43.2 billion yen ($532.2 million), compared to last year's profits of 77.6 billion yen ($956.0 million).

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Joseph Anthony B. A. Tanimowo-Reyes
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At least no non-executives had their actual salaries cut, and nobody got fired.

Glenn Sturgeon
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The sad points of it are nothing has realy happend that not nins own fault. With the early demise of the wii through basicly no support from nin and the realy poor showing so far of wiiU, its a shame employees have to take a hit for a company with gobs of money in the bank.imo

Dave Bellinger
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I don't know about a "hit", sure, a lot of people structure their plans around bonuses from work, but they shouldn't really, it's a bonus for a reason. As it is, the bonus cut could have been much worse, and it's funny to think losing half of what was profit last year only leads to a small portion of BONUSES getting cut.

Nintendo is still doing very well.

Chris Hendricks
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Nintendo, to employees: We've had an unsuccessful year, our first ever annual losses in revenue. So, your company bonus will only be 80% of what it normally is, while our top executives are taking pay cuts.

Employees: This company rocks.

Shea Rutsatz
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It is nice to see execs taking a hit, instead of forcing it all on employees. Hurray for Nintendo!

Fredrik Liliegren
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Nintendo will be a pure software company within 3 years or they will be gone in 5 years.

Justin Speer
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I'm amazed you're giving these hot tips away for free, you must truly be rich in prescience.

Patrick Davis
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If I had a nickel for every time I've seen/heard this statement through the years...

Eric Geer
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I love how we never hear this about Sony or MS--but about the one company that has been through it all and is still moving forward and is successful as a true "game company"


Patrick Davis
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Sony is having more issues than just the gaming sector, so some of that is actually founded. More so than all of this doom and gloom against Nintendo at least.

Merc Hoffner
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No, I do think it's fair to start waving this tired stick at Sony. The Playstation zeitgeist has undeniably dropped, they've been losing money for years, gaming has been at the forefront of those losses, hardware and R&D costs have been at the forefront of that, they've been divesting out of all kinds of hardware manufacture and development for a while, they've made significant market share losses and absolute sales losses including the apparent complete loss of the handheld market, playing the power game has become unaffordable, they're under actual pressure from shareholders, and they have a recent track record of diversification technologies increasingly essential for modern success (what some might call gimmicks) failing on the market. By last count they had actually lost roughly as much money since 2005 as they ever made in the gaming sector, making the whole en-devour null - this is of course difficult to gauge as they've been hiding gaming losses for the last two years by bundling it in with a number of other divisions in their financial reports, usually a sign there's something not worth shouting about.

To top that off in the last generation they've actually transformed their software making capabilities and now have a talented stable of fairly successful dev studios and beloved franchises that actually would at least fit in with Microsoft's platform and yeah, I can see how ditching hardware and becoming a software company could make sense. Not saying I'd recommend it as Playstation still provides certain intangible strategic advantages, but there's certainly more merit to the case at this point than Nintendo.

Merc Hoffner
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P.S. I've been searching for a quote now for a while in 2004 or 2005 where an EA executive said they expected Nintendo to be out of the hardware game within 5 years. Does anyone remember this or know where I can find the article? Try typing in variations of "Nintendo dead in 5 years" in google and predictably it's a mess.

Jonathan Jou
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I really like how exact your prediction is. Could you go into a little more detail? I'm still waiting on the years of business research, advanced and uncannily accurate market prediction, and/or megalomaniacal plan to leave Nintendo with only these two options that will make this summarized prophecy into a tangible future.

See also: I think you have a future in being Michael Pachter. Have you ever considered a career in unprovable speculation?

Merc Hoffner
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It was throughout PS1 and PS2. Not for a few years now though. I've done some digging:

2006 -$1,969,000,000
2007 -$1,245,000,000
2008 -$597,000,000
2009 ~~-$893,000,000~~*
2010 ~~$429,000,000~~*
2011 ~~-$2,803,000,000~~%

*absrobed by new division
%absorbed by new division
The gaming group lost substantial sums (really prodigious) throughout 2006-08. Then things become complicated because they obfiscated the numbers by absorbing the division into their new Networked Products and Services division in 2009. Still in that year they gave a comparisson and showed losses were slightly less then the new division would have lost in the previous year had it existed - but, they said the improvements were due to walkman and were held back by lower performance in the gaming sector, so we can draw that they lost >$597,000,000 in 2009, but the divisions losses were quite comparable and so gaming losses probably weren't that much worse. In 2010 they genuinely made money, with gaming marked out as a significant contributor: their exact words were: "A category that favorably impacted the change in segment operating results (excluding restructuring charges) was the game business". Don't know what the group specific restructuring charges were, but for the whole company it was >$800,000,000, but they had restricturing charges the previous year as well and I don't know how they were incorporated.

Then they complicated things again in 2011 by rearranging the groups a second time and games ended up in a division called "Consumer Products and Services", which saw massive losses ($2.8 billion) compared to ~$120 million profit for the previous year had the division existed. They put this down to "a decrease in sales of LCD televisions, PCs, digital imaging products including digital cameras, and the game business" and said "the decrease in the game business reflects lower sales of PlayStation®3 hardware due to a strategic price reduction and lower sales of PlayStation®2 due to platform migration.". No mention of Vita R&D costs though I suspect they were relatively low with nearly off the shelf parts compared to the PSP.

So by my reckoning they lost at least 4.4 billion dollars between 06-09, made unknown hundreds of million in 2010 and then lost unknown hundreds of millions in 2011. If we look at PS3 alone then the situation is substantially worse as R&D costs extended back into 2004 and 2005 and the gaming group's performance has been buoyed continuously by profits from PS2 and to a smaller extent by PSP. Until 2006 their gaming group had made a sum total of $5.3 billion, but I haven't adjusted for inflation (complicated by currency), so all in all, we don't know, but it ain't pretty.

EDIT: 28 June 2012:
We now know their losses in 2011 filed with the Japanese government:
They lost 94.4 billion yen, which, at a 2011 exchange rate of 79.81 yen/dollar works out at -$1,182,000,000 - a substantial loss, and almost certainly wipes out profits made in 2010. This may very well be covering R&D costs for PS4, but I have my doubts that a) the funding would be so concentrated in time; b) the sharp end of the funding stick would be so early if we were to presume a 2014 release (which I think is reasonable given the demonstrable difficulty in transitioning from first showing at E3 to release within the same year); c) Sony's financial pressures and the market dynamics mean it's very unlikely they're foolhardy enough to pursue such an expensive customized hardware position as they did for the last 3 cycles, and this new thinking is evidenced in PS Vita.

Right now, save for unknown profits in 2010 and unknown losses beyond $600 million in 2009, I have the entirety of the Playstation en-devour, from 1995 to present running at an overall loss - 17 years of Playstation currently add up to <-$130,000,000 and falling.

Merc Hoffner
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Why was this so difficult to find???