XI
you are not logged in
News

Nintendo Report Lower Than Expected Loss

Exchange rates to the rescue.

Nintendo have made a comprehensive effort over the past months to prepare industry watchers for some relatively poor results. With the Wii no longer a figurative money-printing machine for them and the 3DS’ stuttering start prompting a rushed price cut, they were forecasting a net loss for the 12 months to 31st March 2012 of ¥65,000 million (£500.5m, $799.5m). Thanks largely to movements in the foreign currency markets it did not turn out quite that bad for them.

The unanticipated depreciation of the yen invalidated their exchange rate assumptions meaning that not only did the assets they hold that are valued in foreign currencies rise in value, when priced in yen, but also that every pound, euro and dollar we spent on their products was worth more to them in yen. Naturally these currency movements will also have helped Sony’s figures.

The result being that Nintendo’s end of year net loss was reduced to ¥43,204 million (£332.7m, $531.4m) or approximately a third less than they had expected. The other key financial measure frequently referenced is operating profit/loss and Nintendo’s operating loss for the last twelve months was ¥37,320 million (£287.3m, $459m) the first time in their history they have recorded an operating loss.

Hardware Sales and Forecasts

The 3DS has sold 13.53m units during their financial year. Those sales were split evenly across Nintendo’s sales regions with Japan, The Americas and Other (including Europe) accounting for 4.8m, 4.6m and 4m respectively. This brings its life-to-date total to 17.1m.

While last year’s price cut means that they are still selling the 3DS at a loss, they state that they are still on track to “cease selling it below cost” in around six months time. Their forecast for 3DS sales during the twelve months to 31st March 2013 is 18.5m consoles.

The DS family sold another 5.1m consoles bringing its life-to-date total to 151.5m. Nintendo expects DS sales to halve over the next twelve months to 2.5m.  They sold another 9.8m Wiis leading the little white dusty box’s life-to-date total to reach 95.9m.

Their forecast for Wii sales of 10.5m this financial year includes sales of the Wii U which they state will be released “in Japan, the United States and Europe at the end of this calendar year”.

With the 3DS hardware becoming profitable again and the Wii’s successor on the shelves they expect not to be in the position of reporting another operating loss this time next year. While still forecasting a half year operating loss of ¥25,000 million (£192.5m, $307.5) they are expecting to turn things around before the financial year’s end and are expecting an operating profit of ¥35,000 (£269.5m, $430.5m). Time will tell.

Source: Nintendo

Note: Exchange rates used to calculate USD and GBP values from OANDA.  JPY/USD: 0.0123, JPY/GBP: 0.0077.

Read more: #
4 Comments
  1. colossalblue
    Team TSA: Editor
    Since: Forever

    It was always going to be a tough year for them but the 3DS profit and the Wii U, if they can clarify that in consumer’s minds, could make next year much more positive.

    Comment posted on 26/04/2012 at 10:34.
  2. TheDemocrodile
    Member
    Since: May 2010

    i thought this would cause a bigger reaction here than it has.
    Has no-one noticed that the 3DS is being sold at a significant loss thanks to the price cuts and is only “expected” to start making profit in march 2013?
    This is massive news for the mobile gaming industry as its surely a key indicator that the casual market that bought the DS in droves isnt seeing the merit in upgrading?
    Wouldnt that have big repercussions for the Wii U?

    Comment posted on 26/04/2012 at 19:17.
    • Watchful
      Team TSA: Writer
      Since: Oct 2008

      March 2013? As I said above Nintendo expect to “cease selling [the 3DS] below cost” in about six months, or the middle of this financial year. They’ve been predicting it would be sometime between June and September for a while now.

      Even though they are selling the hardware at a loss does not mean they aren’t at least breaking even on the 3DS once software sales (and royalties from the same) are taken into account. It’s the slow start the 3DS had combined with the decline in DS and Wii hardware and software sales. Falling revenue while trying to develop and launch two new systems (3DS and Wii U) does not a healthy balance sheet make.

      Comment posted on 26/04/2012 at 20:01.
    • Watchful
      Team TSA: Writer
      Since: Oct 2008

      Oh and almost nobody around here reads my financial posts so they probably aren’t around to create a bigger reaction. :-)

      I could have made four tiny news posts with shouty headlines about the above like many other sites choose to but that’s not my, or TSA’s, way.

      Comment posted on 26/04/2012 at 20:03.

Leave a Reply

You must be logged in to post a comment.

Latest Comments