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Declining DS Biz, Strong Yen Carve $288.4 Million Q1 Loss For Nintendo

Declining DS Biz, Strong Yen Carve $288.4 Million Q1 Loss For Nintendo

July 29, 2010 | By Leigh Alexander

July 29, 2010 | By Leigh Alexander
More: Console/PC

Unfavorable exchange rates and a contracting DS business slugged Nintendo's balance sheet during its fiscal first quarter ended June 30, and the company today reported a 25.2 billion-yen ($288.4 million) loss -- in the same period last year, it saw a 42.3 billion-yen ($483.7 million) profit. Sales slipped over 25 percent year over year to 188.6 billion yen ($2.16 billion).

Although Nintendo pointed to the hardware discounting in Japan and Europe and the strong yen, DS unit sales were also down about 45 percent in the quarter to 3.15 million units.

Though it appears pleased with the continuing performance of Pokemon HeartGold/SoulSilver (which sold 1.69 million units in the quarter to surpass 10 million units life-to-date) and Tomodachi Collection, the company noted it had fewer major new releases during the period to act as hardware sales drivers.

A total 22.4 million units of DS software sold in the first quarter compared with 29.1 million the previous year. Wii software also declined, from 31.7 million to 28.2 million.

Wii hardware sales were up from 2.2 million units last year to 3.04 million, but software sales declined from 31.07 million units to 28.17 million. Super Mario Galaxy 2, which sold 4.09 million units during the period was the company's top seller, and Wii Sports Resort sold 3.02 million.

Wii Sports sold 2.73 million, Wii Fit Plus sold 1.87 million, and New Super Mario Bros Wii sold 1.10 million during the period -- as Nintendo often points out, it routinely has quarterly million-sellers in its portfolio of "evergreen" core properties.

Nintendo is ready to address the decline in the DS market with the launch of the 3DS, which the company said will happen this fiscal year (by March 2011). Pachter suggests the new handheld "will be able to sell millions of units, even at a price upwards of $250," and also says it's likely the company will leverage the platform launch to set slightly higher price points for DS software.

Despite its losses, Nintendo still plans for 200 billion yen ($2.3 billion) in profits for its full fiscal year, and a 320 billion yen ($3.7 billion) operating profit, betting on the strength of upcoming launches like the 3DS, Pokemon Black/White, Metroid: Other M, the U.S. launch of Wii Party, and more.

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