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Nintendo Slashes Earnings Forecasts and Hardware Sales Targets

Company expects to sell fewer Wii and DS systems than previously announced.

 
Zelda 3DS, shown promoted here by Arashi, was one of just a few high spots for Nintendo in the first quarter.

Nintendo has sharply downgraded its earnings forecasts for the current half year and full year terms. It also lowered shipment forecasts for Wii and DS, but kept 3DS shipment targets unchanged and increased 3DS software targets.

For the half year spanning April 1 through September 30, the company initially expected net sales of 360,000 million yen, operating income of 20,000 million yen and net income of 18,000 million yen. These have been respectively cut to 240,000 million yen and losses of 50,000 million yen and 35,000 million yen.

For the full year ending March 31, 2012, the company has lowered its sales forecast from 1,100,000 million yen to 900,000 million yen, operating income forecast from 175,000 million yen to 35,000 million yen, and net income forecast from 110,000 million yen to 20,000 million yen.

As reason for the revisions, Nintendo cited stronger-than-expected yen appreciation, sales performance, the price reduction of the 3DS hardware, and sales outlook for the holiday season. Regarding the yen issue, Nintendo had to revise its exchange rate assumption from 83 yen to 80 yen per US dollar.

Nintendo also lowered some of its hardware forecasts from the targets that were shared in April. The company expects to sell 9 million DS systems, 16 million 3DS system and 12 million Wii systems. The 3DS figure is unchanged, but the DS and Wii figures are down respectively from 11 million and 13 million.

On the software forecast front, the company expects to sell more 3DS software. Compared to the 62 million it announced in April, it now expects 70 million units. DS software forecasts were cut from 67 million to 62 million. Wii was cut from 120 million to 110 million.

Nintendo also shared its earnings for the current three month period ended June 2011. Sales fell to 93,928 million yen from the 188,646 million the same three month period in 2010. Nintendo posted an operating loss of 37,712 million yen over the period, compared to the 23,342 million operating gain last year. Net loss remained level at 25,516 million yen.

Reasons cited by Nintendo for the losses included the exchange rate, costs associated with advertising the 3DS, and costs related to research and development for the upcoming Wii U system.

3DS sold 0.71 million units of hardware and 4.53 million units of software worldwide over the term, bringing its total hardware sales to 4.32 million units and total software sales to 13.96 million units. Among the 3DS titles release over the period, Nintendo said Zelda Ocarina of Time 3D was favorably received, but "3DS had few other hit titles."

You can read Nintendo's full earnings materials here:

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