Thu, Jan 31, 2013 - Page 15 News List

Weak Wii U sales force Nintendo to cut forecasts

Bloomberg

Nintendo Co, the world’s largest maker of video-game machines, yesterday said it expects a full-year operating loss as it cut estimates for sales of its Wii U consoles and 3DS handheld players.

The loss may reach ¥20 billion (US$220 million) for the year ending March 31, compared with a previous estimate of a ¥20 billion profit, the Kyoto, Japan-based company said in a statement.

Nintendo cut its full-year forecast for Wii U sales to 4 million units from 5.5 million and its outlook for 3DS players to 15 million units from 17.5 million.

Nintendo is selling the Wii U, the industry’s first major new console since 2006, at a loss as president Satoru Iwata counts on software sales to revive earnings after posting the company’s first annual loss in three decades last fiscal year. Iwata is under pressure to replicate the success of the original Wii after the 3DS failed to meet sales targets because of consumer shifts to games on smartphones and tablet computers.

“The result is worse than expected,” said Makoto Kikuchi, chief executive officer at Myojo Asset Management Japan Co, a Tokyo-based hedge fund advisory firm. “The company needs to do something to get out from a money-losing structure.”

Sales of the Wii U have not been as strong as expected, Iwata told reporters yesterday in Osaka. The company is aiming for operating profit of at least ¥100 billion in the fiscal year starting April 1, he said.

The Japanese currency has depreciated more than 5 percent against the US dollar in the past month, boosting the repatriated value of Japanese exporters’ overseas earnings.

Nintendo sold 12.7 million 3DS players and 3.06 million Wii U machines in the nine months that ended on Dec. 31, it said.

The company cut its full-year sales estimate of Wii U software to 16 million units from 24 million and trimmed its 3DS software sales to 50 million from 70 million.

“These are horrible sets of numbers,” Amir Anvarzadeh, a Singapore-based manager for Asia equity sales at BGC Partners Inc, said in an e-mail.

Nintendo “has slashed unit sales forecasts across the board,” he said.

Nintendo raised its full-year net income forecast to ¥14 billion from ¥6 billion, citing a weaker yen. The forecast compares with the ¥6.6 billion average of 16 analyst estimates compiled by Bloomberg.

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