Nintendo Co shares yesterday plunged nearly 19 percent before recouping most of those losses after the Japanese gaming giant warned it would slip back into the red on poor sales of its Wii U game console.
The warning, released after the Tokyo market closed on Friday, highlighted a growing chasm between Nintendo and global rivals Sony Corp and Microsoft Corp, as well as the trio’s battle against cheap — or sometimes free — downloadable games for smartphones and tablets.
Shareholders unloaded the stock at the opening bell yesterday after Kyoto-based Nintendo said it would lose ￥25 billion (US$240 million) in the fiscal year to March, reversing an earlier ￥55 billion net profit forecast.
Photo: Reuters
However, the shares recovered from their morning losses to close 6.14 percent lower at ￥13,745.
Nintendo, maker of the Donkey Kong and Super Mario brands, blamed the downgrade on expectations it would now sell just 2.8 million units of the Wii U worldwide in the current fiscal year.
That is less than a third of its earlier prediction for 9 million consoles, and deals a blow to high hopes it would match the blockbuster success of the original Wii.
In contrast, Sony’s PlayStation 4 and Microsoft’s Xbox One have seen huge demand for their new consoles as the firms battle for control of a global sector worth about US$44 billion annually.
On Friday, Nintendo said that holiday season demand failed to boost flagging sales, forcing the company to slash forecasts as sales of the console’s high-margin software slumped.
For Nintendo, the grim forecast is especially disappointing after it scratched its way back to profitability last year thanks to a sharply weaker yen, which inflates Japanese firms’ repatriated profits.
“Investors had been praying for a strong recovery but what’s obvious now is that the company is lagging behind,” Daiwa Securities senior strategist Hirokazu Kabeya said. “Both the hardware and software businesses were bad. It was as if the company got a ‘no’ verdict on all aspects.”
“We should closely watch how the company will rehabilitate itself from here,” he added.
Nintendo has previously blamed weak earnings partly on high development and marketing costs for the Wii U, launched in late 2012, although sales of its 3DS handheld console and related game titles fared better. It cut prices on both consoles to boost sales.
Nintendo president Satoru Iwata apologized to shareholders at a press briefing on Friday, saying: “My duty, more than anything else, is to revive our business momentum.”
The company is to hold a briefing about its new strategy on Jan. 30.
Nintendo’s grim downgrade came as key domestic rival Sony saw record demand for its new PlayStation 4 console, which had already sold more than 4.2 million units by the start of the year.
The console was launched on Nov. 15 last year.
US rival Microsoft has also seen robust demand for its Xbox One console, which sold more than 1 million units in the 24 hours after its release in November last year.
The firms are giants in the global videogames industry, but they have faced tough economic conditions in the US and Europe, while also battling a move to smartphone games.
“One smartphone does everything for many people and so they don’t feel the need to have game consoles,” Kabeya said.
He said Nintendo had plenty of cash on hand so its balance sheet was safe for now, but “its finances will become severer and severer if thing carry on like this.”
DIVIDED VIEWS: Although the Fed agreed on holding rates steady, some officials see no rate cuts for this year, while 10 policymakers foresee two or more cuts There are a lot of unknowns about the outlook for the economy and interest rates, but US Federal Reserve Chair Jerome Powell signaled at least one thing seems certain: Higher prices are coming. Fed policymakers voted unanimously to hold interest rates steady at a range of 4.25 percent to 4.50 percent for a fourth straight meeting on Wednesday, as they await clarity on whether tariffs would leave a one-time or more lasting mark on inflation. Powell said it is still unclear how much of the bill would fall on the shoulders of consumers, but he expects to learn more about tariffs
Meta Platforms Inc offered US$100 million bonuses to OpenAI employees in an unsuccessful bid to poach the ChatGPT maker’s talent and strengthen its own generative artificial intelligence (AI) teams, OpenAI CEO Sam Altman has said. Facebook’s parent company — a competitor of OpenAI — also offered “giant” annual salaries exceeding US$100 million to OpenAI staffers, Altman said in an interview on the Uncapped with Jack Altman podcast released on Tuesday. “It is crazy,” Sam Altman told his brother Jack in the interview. “I’m really happy that at least so far none of our best people have decided to take them
PLANS: MSI is also planning to upgrade its service center in the Netherlands Micro-Star International Co (MSI, 微星) yesterday said it plans to set up a server assembly line at its Poland service center this year at the earliest. The computer and peripherals manufacturer expects that the new server assembly line would shorten transportation times in shipments to European countries, a company spokesperson told the Taipei Times by telephone. MSI manufactures motherboards, graphics cards, notebook computers, servers, optical storage devices and communication devices. The company operates plants in Taiwan and China, and runs a global network of service centers. The company is also considering upgrading its service center in the Netherlands into a
NOT JUSTIFIED: The bank’s governor said there would only be a rate cut if inflation falls below 1.5% and economic conditions deteriorate, which have not been detected The central bank yesterday kept its key interest rates unchanged for a fifth consecutive quarter, aligning with market expectations, while slightly lowering its inflation outlook amid signs of cooling price pressures. The move came after the US Federal Reserve held rates steady overnight, despite pressure from US President Donald Trump to cut borrowing costs. Central bank board members unanimously voted to maintain the discount rate at 2 percent, the secured loan rate at 2.375 percent and the overnight lending rate at 4.25 percent. “We consider the policy decision appropriate, although it suggests tightening leaning after factoring in slackening inflation and stable GDP growth,”
RSS