Nintendo Falls Most Since 2011 as Consoles Miss Targets

Nintendo Co., the world’s biggest maker of video-game machines, fell the most in more than a year in Osaka trading after missing sales targets for its consoles.

Nintendo declined 5.9 percent to 11,240 yen at the close of trade, the largest drop since September 2011. The “Super Mario” creator said yesterday it sold 3.45 million of its Wii U machines in the year ended March 31, compared with a 4 million-unit target it set in January and an initial projection of 5.5 million.

Weak sales of the Wii U, Nintendo’s first home-gaming console since 2006, and the handheld 3DS player led to a second straight operating loss in the year ended March 31, the Kyoto, Japan-based company said in an earnings statement yesterday. President Satoru Iwata said new software titles will drive sales of the devices, helping Nintendo increase net income more than sevenfold in the year started April 1.

“Nintendo’s sales growth target looks rather steep,” Shunsuke Tsuchiya, a Tokyo-based analyst at Credit Suisse Group AG, wrote in a report today. For the first half of the current fiscal year, “we expect a dearth of new titles to keep profits tracking at low levels,” Tsuchiya said.

The Wii U failed to meet sales targets amid a delay of software releases, Iwata, 53, said yesterday. The release of “Pikmin 3” in Japan was delayed to July from this spring, according to company announcements. “Game & Wario” was pushed back to March 28 from the beginning of the year.

“We seem to always end up with a lack of software in the beginning when we introduce a new platform,” Iwata said. “That’s a big regret.”

‘Animal Crossing’

Iwata expects to sell 9 million Wii U consoles and 18 million 3DS players this fiscal year as Nintendo releases new titles and introduces top-selling Japanese games for the 3DS such as “Animal Crossing: New Leaf” in overseas markets.

“Sales momentum is improving in Europe and the U.S.” for the 3DS, Iwata said. “We’re preparing to introduce software seamlessly throughout the year.”

Net income will rise to 55 billion yen ($553 million) in the 12 months ending March 31, Nintendo said yesterday. That compares with the 50.8 billion-yen average of 19 analyst estimates compiled by Bloomberg before the announcement. The company reiterated a 100 billion-yen operating profit target, compared with the average analyst estimate of 70 billion yen.

Net Income

Nintendo reported net income of 7.1 billion yen for the year ended March 31, compared with its forecast for a 14 billion-yen profit. A weaker yen resulted in a 39.5 billion-yen foreign-exchange gain for the 12-month period, helping Nintendo recover from a year-earlier net loss.

The Wii U, priced starting at $300, features a 6.2-inch touchscreen controller that lets users wirelessly connect to the console and shift the display between the device and a TV. It is the industry’s first new home-gaming console since 2006, the year Nintendo released its predecessor, the Wii.

Nintendo will face tougher competition this year from rival console makers in a market that’s shrinking amid the shift to mobile devices.

Sony Corp. said in February that it will release a PlayStation 4 before the year-end holiday season, its first upgrade in seven years. Microsoft Corp. said yesterday that it will introduce the successor to its Xbox 360 at an event in May.

The company doesn’t plan to cut the Wii U’s price to drive sales, Iwata said yesterday.

Weaker Yen

A weaker Japanese currency is boosting the repatriated value of overseas earnings for the nation’s exporters. The yen has depreciated about 13 percent against the U.S. dollar this year, touching a four-year low of 99.95 on April 11, while weakening about 12 percent against the euro.

U.S. retail sales of video-game hardware, software and accessories fell 10 percent from a year earlier to $992.5 million last month, according to NPD Group Inc. Hardware sales dropped the most, declining 32 percent, the Port Washington, New York-based research company said April 18.

“It’s unclear whether Nintendo can sell the 3DS and Wii U as it plans,” Satoshi Yuzaki, general manager at Takagi Securities Co. in Tokyo, said yesterday. “The 3DS and Wii U lack the power of appeal.”

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