Nintendo Co., the world’s largest maker of video-game machines, plunged the most in seven weeks in Osaka trading after forecasting a second straight operating loss on lower-than-expected sales of its consoles and players.
Nintendo fell 4.6 percent, the most since Dec. 11, to 8,920 yen. The Kyoto, Japan-based company yesterday said it will probably make an operating loss of 20 billion yen ($220 million) in the year ending March 31, compared with an earlier forecast for a profit of 20 billion yen.
The company cut its full-year forecast for Wii U sales to 4 million units from 5.5 million as it struggles to compete with tablet computers made by Apple Inc. and Samsung Electronics Co. Sales of the device, the industry’s first major new console since 2006, have also been hit by delays in software development, President Satoru Iwata told reporters today in Tokyo.
“Nintendo isn’t offering something that makes consumers want to buy,” said Ichiro Takamatsu, a Tokyo-based fund manager at Bayview Asset Management, which oversees 150 billion yen. “Nintendo should beef up measures to reward shareholders if the company can’t expect sales to recover.”
Nintendo also lowered its full-year forecast for 3DS handheld player sales to 15 million units from 17.5 million. The full-year sales estimate for Wii U software was cut to 16 million units from 24 million, and the 3DS software sales target was pared to 50 million from 70 million.
Wii U, 3DS
“We haven’t been able to convey the product value of the Wii U,” said Iwata, adding that the company “struggled the most in the U.S.” The company sold 12.7 million units of the 3DS and 3.06 million Wii Us in the nine months ended Dec. 31.
Nintendo has no plans to cut the price of the new console and will “aggressively” release new games in the second half of the year, Iwata said. He also said he is “committed” to targeting operating profit of at least 100 billion yen in the fiscal year starting April 1, subject to currency fluctuations.
The company raised its net income forecast for the year ending March 31 to 14 billion yen from 6 billion yen, citing the weaker yen. The forecast compares with the 6.6 billion-yen average of 16 analysts’ estimates compiled by Bloomberg before the announcement.
The Japanese currency has depreciated about 5 percent against the U.S. dollar in the past month, boosting the repatriated value of Japanese exporters’ overseas earnings.
Nintendo plans to add flagship titles including the Mario Kart and Zelda franchises, to the Wii U, it said Jan. 24. The machine’s Miiverse social network will be available through smartphone browsers starting this spring, and Nintendo plans to offer an app, it said at the time.
U.S. retail sales of video-game software, hardware and accessories declined 22 percent from a year earlier to $3.21 billion in December, according to NPD Group Inc. Software sales fell 26 percent to $1.54 billion, leading the total decline, the Port Washington, New York-based company said Jan. 10.
Console sales fell 20 percent to $1.07 billion, and retail sales for the year fell 22 percent to $13.3 billion, NPD said. Nintendo’s Wii machines compete with Sony Corp. (6758)’s PlayStation and Microsoft Corp. (MSFT)’s Xbox 360.
The Wii U machine features a 6.2-inch touchscreen controller that lets users wirelessly connect to the console and shift the display between the device and a television screen. Within days of its U.S. release, the company warned buyers not to turn off the console while downloading a mandatory firmware update after some customers complained their machines were damaged during the process.
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