Nintendo Falls on Lowered Forecasts, 3DS Player Delay

Nintendo Co. tumbled the most in 20 months in Osaka trading after the company cut its profit forecast and pushed back the release of its 3DS handheld game player until after the year-end holiday season.

Nintendo plunged 8.9 percent to 20,970 yen at 10:38 a.m. on the Osaka Securities Exchange, poised for the largest drop since January 2009. The decline wiped out all of Nintendo’s gains for 2010 and the stock was the worst performer on the MSCI Asia Pacific Index.

President Satoru Iwata said yesterday the company pushed back the release of the 3DS, the biggest overhaul of Nintendo’s flagship handheld device since 2004, until Feb. 26 because of concerns over production. The Japanese games maker also blamed a stronger-than-anticipated yen for slashing its annual net income forecast 55 percent.

“Smacks of a company that has lost its way: Bad forecasting, slow delivery,” MF Global FXA Securities Ltd. wrote in an equity-sales note to clients today. “It’s pretty much the worst case scenario for Nintendo.”

Profit will fall to a six-year low of 90 billion yen ($1.1 billion) in the 12 months ending March 31, while sales will probably drop 23 percent to 1.1 trillion yen, Nintendo said. Operating profit, or revenue minus the cost of goods sold and administrative expenses, will slump 41 percent to 210 billion yen, missing the previous outlook by 34 percent.

Stronger Yen

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.

The 3DS will be priced at 25,000 yen when it begins selling in Japan on Feb. 26 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. The product will go on sale in the U.S. and Europe in March, Nintendo said.

Nintendo yesterday also slashed its annual DS sales outlook 22 percent to 23.5 million units in the year to March 2011 and cut the sales forecast for the Wii 2.8 percent to 17.5 million units.

The company said it will probably sell 125 million units of DS software, of which 15 million will be titles for the 3-D version. It previously estimated software sales of 150 million units. Sales of Wii titles will drop 30 percent to 135 million units, 18 percent less than its previous goal.

To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net.

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net.

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