Nintendo reported a 42 per cent fall in quarterly operating profit as the yen's strength outweighed robust game sales, and the Japanese video game maker forecast a weaker-than-expected 12 per cent profit decline this year, sending its shares lower.
Despite the slide in quarterly profit, it has fared much better than many other consumer electronics makers. Sony, for instance, is deep in the red, hit by the yen's appreciation, slumping demand and mounting restructuring costs.
Nintendo has weathered the financial crisis relatively well as consumers continue to spend on video games as affordable entertainment while tightening their purse strings for big-ticket items such as car and TVs.
Nintendo, vying with Microsoft and Sony, said today it expects a 11.8 per cent fall in operating profit to 490 billion yen ($5 billion) for the year to March 2010, compared with a consensus for a 517.4 billion yen profit in a poll of 25 analysts by Thomson Reuters.
It would be Nintendo's first annual operating profit decline in four years.
The company expects the DS handheld player to post a 4 per cent slide in unit sales this year, in its first fall since the 2004 launch, while forecasting flat sales of the Wii console.
Nintendo's Wii and the DS have clearly outsold rival machines from Sony and Microsoft.
But Sony's PlayStation 3 sold more units than the Wii in March and April in Japan, raising the possibility that the company's growth momentum could be losing some steam.
In a potential move to reinvigorate its game machine sales, Nintendo plans to launch a highly anticipated “Wii Sports Report” software in June.
Reuters