Nintendo Cuts Profit Forecast on Yen, Year-End Sales
Net income will total 90 billion yen ($1.1 billion) in the year ending March 2011, compared with an earlier forecast for 200 billion yen, the Kyoto, Japan-based company said in a statement today. The company reported a profit of 228.6 billion yen last year.
The stronger Japanese currency and “release conditions for the Nintendo 3DS” game player are hurting earnings, Nintendo said. The company will introduce the new hand-held machine in February, missing the year-end holiday season. The yen has surged against the dollar this year, reaching a 15-year high of 82.88 earlier this month and reducing the company’s repatriated earnings from overseas sales.
“February is an odd time to release the product. The holiday season will be over,” said Yoshihiro Okumura, who helps manage the equivalent of $365 million at Chiba-Gin Asset Management Co. in?Tokyo. “The new product won’t contribute much to the current fiscal year’s earnings. The expectation for the new hardware was high.”
Nintendo will begin sales of its three-dimensional 3DS handheld player starting Feb. 26 in Japan and in the following month in the U.S. and Europe, the company said today, before the forecast announcement.
The product will be priced at 25,000 yen in Japan and is Nintendo’s biggest portable product debut since the 2004 release of the touch-screen DS player, which sold more than 132 million units worldwide.
Nintendo fell 3.7 percent to close at 23,010 yen in Osaka trading, narrowing its gain this year to 4.4 percent. Japan’s benchmark Nikkei 225 Stock Average has slid 9.4 percent this year.
The DS and Nintendo’s Wii consoles led a 10 percent decline in U.S. video-game hardware and software sales in August, market researcher NPD Group Inc. said earlier this month. Sales of the DS slumped 38 percent to 342,700 players, while those of the Wii fell 12 percent to 244,300 consoles, the lowest since its debut in November 2006, according to NPD.
The Wii, which allows players to simulate tennis shots or golf-club and sword strokes by using a controller, is facing increased competition as Sony Corp. and Microsoft Corp. release their own motion-sensing devices.
Sales will probably total 1.1 trillion yen for the year, compared with an earlier forecast for 1.4 trillion yen, Nintendo said today. Operating profit, or sales minus the cost of goods sold and administrative expenses, will be 210 billion yen, 34 percent less than previously forecast.
The company changed its assumptions for the yen’s exchange rate to 85 yen to the dollar from 95 yen, and 110 yen to the euro from 120 yen.
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