Nintendo Falls After Halving Profit Goal on Weak 3DS Sales

  • Shares drop as sluggish handheld sales, yen cut earnings
  • The maker of Mario games reduces net income forecast 51%

Nintendo Co. fell in Tokyo after halving its annual profit outlook on weak sales of 3DS handheld players and the impact of a stronger yen, increasing pressure on the company to make its smartphone debut next month a success.

The stock dropped as much as 5.4 percent before closing 1 percent lower at 15,815 yen. The Kyoto-based company on Friday slashed its net income target 51 percent to 17 billion yen ($150 million) in the year ending March and cut its 3DS sales outlook 13 percent.

Nintendo plans to release its Miitomo game for mobile devices next month, setting the stage for its biggest shakeup since the 1970s, as it tries to capture players who have shifted to mobile gaming. Nintendo’s traditional business of games on its own hardware, anchored by legendary hits like Super Mario Brothers and Donkey Kong, has struggled with sliding sales. Nomura Holdings Inc. cut its 12-month price target on the company 12 percent to 15,300 yen.

“Nintendo’s 3DS hardware is struggling from lack of new titles,” Masaru Sugiyama, an analysts at Goldman Sachs Group Inc., wrote in a report on Monday. “The platform is peaking out.”

Smartphone Push

Operating income will be 33 billion yen this fiscal year, down from an earlier projection of 50 billion yen. The currency fluctuation reduced profit by 20 billion yen, Nintendo said. The company cuts its projection for sales by 12 percent to 500 billion yen, the lowest revenue level in at least 15 years.

The forecast cut shows how much is riding on Nintendo’s foray into mobile. The shares rose 33 percent last year, fueled by the March announcement that the company planned to develop titles for mobile devices made by other companies. Much of the gains were lost, however, after Nintendo delayed the debut in October.

Earlier this month, Nintendo started registration for Miitomo, a free-to-play messaging-based application. President Tatsumi Kimishima has said the next smartphone game will feature one of Nintendo’s beloved characters, without giving further details.

Kimishima has also said the company’s work on a successor to the Wii U, code-named NX, remains on track. He said the company is even exploring possibilities in virtual reality, though no concrete plans exist as yet.

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