Nintendo is on track to report its first ever annual loss come the end of its 2011 fiscal year. Today, the company told press it expected to post losses of 20 billion yen ($264 million) by March 2012, marking a unenviable first for the company since it began releasing its numbers back in 1981.
Earlier this year, Nintendo forecasted a profit of 20 billion yen. However, today it revised its predictions based on weakening console and software sales, and a “stronger-than-expected yen appreciation” in the first half of its 2011 fiscal reporting period, which ended on September 30th. During this six month stretch, the company said it sold 3.07 million Nintendo 3DS handhelds, 3.35 million Nintendo Wii units, and a lower-than-expected 36.45 million in Wii software sales—the latter of which was pinned to a lack of major releases and new games.
To put the new numbers in perspective, Nintendo said it is now expecting its 2011 sales to reach 790 billion yen ($10.4 billion) - a noticeable drop from last year's sales of 1.01 trillion yen ($13.3 billion).
As anticipated in an earlier story by Japanese news outlet Nikkei, Nintendo reported its half-year pre tax losses had hit 100 billion yen ($1.3 billion dollars), exceeding its original estimation of 55 billion yen ($725.6 million). A large part of that decline is being attributed to exchange losses driven by a strong yen mixing with other less-than-stellar economies. Specifically, Nintendo says this factor alone amounted to a half year loss of 52.4 billion yen ($691.6 million).
The main takeaway here is Nintendo appears to have been hit hard by the one-two punch of an unfavorable economy and a downturn in sales. As to the latter, as we mentioned yesterday Nintendo always has a way of bouncing back with a new Mario or Zelda game - and wouldn't you know, there are a few of those coming down the pipe just in time for the gift giving season. What's more, although the Wii U won't likely be out until its next fiscal year, that too will likely have a great impact on Nintendo's fortunes - potentially for the better.
Oct 27, 2011