Nintendo Cuts Full-Year Forecast after Six Month Financial Results

Nintendo has continued to post losses as the results of thesix month fiscal period ending September 2012 (embedded below). Nintendo is posting losses of ¥28 billion (approx. $350 million USD). Sales were also down to ¥201 billion ($2.52 billion), a decrease of a 6.8% from the same period last year, which itself was a 40% drop from the same period in 2010.

 

In response to this, Nintendo has revised their fiscal forecast for the year of 2012. The company still expects to make a profit but has revised the number from ¥20 billion (approx. $250 million) down to a more manageable ¥6 billion (approx. $75.15 million).

Nintendo had expected losses this period but lost more than expected, forecasting a loss of ¥20 billion yen instead of ¥28 billion.

The company blamed the worsening yen-to-dollar exchange rate, which created losses of a staggering ¥23 billion ($290 million) in addition to weaker sales of the 3DS system overseas.


Analysis: Nintendo can’t really catch a break, can they?

After their first year in the red (2011) and poor first half results from this year, the last thing they needed was more bad news.

It looks bad on the surface, but Nintendo are on the right path despite all this; losses are shrinking across the board, and Nintendo expects to be in the black again come the end of the fiscal year. Not to mention that there is another expense that has dragged down revenues: the manufacturing of Wii U systems.

The Wii U is right around the corner and manufacturing of the console started in September, which falls squarely in the end of this financial report. However, it doesn’t factor in the potential sales of the system that could make up for the fabrications costs just yet.

That being said, it all really comes down to how the Wii U preforms at retail this year, and that worries me. Nintendo were all gung ho about the 3DS last year, and they ended up having to cut the price a few months after release despite how it sold faster than the original DS at launch.

Nintendo has become a victim of its own success. Now anything less than Wii-like launch sales would be unacceptable.

Nintendo September End 2012

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Mohamed Al Saadoon

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