Nintendo said it expects an operating loss of 35 billion yen (€246 million) for the year to end-March, citing much weaker-than-expected sales of its Wii U and 3DS game machines during the crucial holiday season.
The move reverses its previous forecast of a 100 billion yen profit and would mark the third consecutive year of operating losses for the embattled company, falling drastically short of the average estimate of a 54.7 billion yen profit in a survey of 18 analysts by Thomson Reuters.
The warning comes just three months after the creator of the Super Mario franchise stood by its sales projections for the Wii U, counting on the console to revive its fortunes amid cut-throat competition from Microsoft’s new XBox One and Sony’s recently released PlayStation 4.
“We failed to reach our target for hardware sales during the year-end, when revenues are the highest,” the Osaka-based company said in a statement. “As a result, the sale of high-margin software fell far short of our projections.”
The dismal sales of the Wii U mark a major setback for Nintendo president Satoshi Iwata, who has repeatedly had to scale back sales projections for the console as it failed to emulate the success of its hugely popular predecessor, the Wii.
Mr Iwata told a briefing a year ago, when the company warned of its second consecutive year of operating losses, that he had “made a commitment” to achieve an operating profit of 100 billion yen or more in the year to March 2014.
“The fact that the ‘Wii U strategy’ has failed is disappointing and will likely trigger a sell-off as soon as the market opens,” said Makoto Kikuchi, chief executive of Myojo Asset Management.
“The company appears to have failed to differentiate the Wii U from the Wii,” he said, adding that his own 10-year-old son, who owns a Wii and DS, had shown no interest in the Wii U.
Nintendo also warned today of a net loss of 25 billion yen for the year ending on March 31st, a substantial reversal from its prior projection of a 55 billion yen profit. It now expects revenues of 590 billion yen, down 36 per cent from its prior forecast. It cut its full-year dividend to 100 yen from 260 yen.
The company slashed its global Wii U sales forecast for the business year by almost 70 per cent, to 2.8 million units from 9 million, and its 3DS sales forecast to 13.5 million units from 18 million units.
Nintendo shares have fallen almost 10 per cent since hitting a two-and-a-half year high of 15,880 yen on Jan. 10. The stock climbed 55 per cent in 2013, in line with a 57 per cent rally by the benchmark Nikkei average but underperforming a 91 per cent surge by rival Sony. (Reuters)
