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Nintendo Projects First Ever Annual Loss, Misses Half-Year Forecasts

Nintendo Projects First Ever Annual Loss, Misses Half-Year Forecasts

October 27, 2011 | By Kris Graft

Nintendo on Thursday forecast a 20 billion yen ($264 million) loss for the full fiscal year ending in March 2012, which would mark its first ever annual net loss since it started reporting its financials in 1981.

In July, the Kyoto-based Mario house originally expected profits of 20 billion yen. Nintendo said the fiscal year earnings forecast revision is due to "stronger-than-expected yen appreciation," a crippling factor for a company like Nintendo which relies on exports.

The company also pointed to "current sales performance" and the holiday sales outlook for full-year downgrade.

Nintendo now expects full fiscal year sales to be 790 billion yen ($10.4 billion), down 12 percent from the previous forecast of 900 billion yen ($11.9 billion). Last fiscal year saw total actual sales of 1.01 trillion yen ($13.3 billion).

Half-Year Results

"Weaker than expected" hardware sales for Nintendo DS hardware and Nintendo 3DS software, combined with an unexpectedly strong yen, caused Nintendo to miss profits and earnings forecasts for the half-year ended September 30.

During the six months, Nintendo sold 8.13 million Nintendo 3DS software units. Combined sales of Nintendo's previous generation DS (DS Lite, DSi, DSi XL) were 2.58 million, with last-gen DS software sales of 28.99 million.

Nintendo's Wii home game console saw hardware sales of 3.35 million units. Software sales were 36.45 million, "because of fewer hit titles and a small number of new titles."

Half-year losses were 70.2 billion yen ($926.3 million), missing Nintendo July forecast of a net loss of 35 billion yen ($461.9 million) for the half-year. The strong yen amounted to exchange losses of 52.4 billion yen ($691.6 million). Sales were 215 billion yen ($2.8 billion), missing the half-year forecast of 240 billion yen ($3.2 billion).

The game maker also confirmed a Japanese report earlier this week that pegged half-year pre-tax losses at over 100 billion yen ($1.3 billion). Pre-tax losses were originally forecast to be 55 billion yen ($725.6 million).

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