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Nintendo operating profit hit by weak console sales

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(Globalpost/GlobalPost)

Japan's Nintendo said on Wednesday weak sales of its two main consoles had left it with an operating loss in the year to March as it struggles to get back on top in the multi-billion-dollar games market.

However, it said that a recent dip in the value of the yen had helped its net profit return to the black and predicted an eight-fold surge for the next 12 months.

The results come as Nintendo competes with Sony and Microsoft, makers of the PlayStation and Xbox, for dominance in a sector worth about $44 billion a year.

At the same time the trio face tough economic conditions in their key US and European markets, while also fending off a challenge from cheap -- or sometimes free -- downloadable games for smartphones and tablets.

The firm behind Donkey Kong and Super Mario, one of the best-selling video game franchises of all time, said sales of its new Wii U game console had not lived up to expectations.

Nintendo has been banking on the Wii U to boost its fading fortunes after the original Wii, launched in 2006, proved a huge success as it lured legions of casual gamers with motion-sensing controls.

But Wii U, released late last year, "was not able to maintain the initial sales momentum after the beginning of 2013 due to a delay in the development of subsequent software titles", the firm said Wednesday.

With the Wii U, Nintendo vowed to start a trend in "asymmetrical play" that gives players using GamePad tablets different in-game perspectives and roles than those using traditional wand controllers.

The new console is also portable -- offering up a challenge to smartphone games -- but still offering the same benefits as the like the original Wii.

It added that sales of its 3DS, the world's first video game console with a 3D screen that works without special glasses, were also disappointing.

"Nintendo 3DS and Wii U game consoles did not sell in the scale the company had expected, which increased an operating loss," it said.

Nintendo said it sold about 14 million Nintendo 3DS in the year to March, missing a target of 18 million units while sales of the Wii U came in at 3.45 million units since its November release in the United States, below its target of 4 million.

The poor performance of the consoles meant Nintendo's operating loss widened to 36.4 billion yen ($365 million) for the fiscal year to March, from a 20 billion yen forecast in January.

However, it did forecast an eight-fold jump in net profit for the current fiscal year but after saying it had returned to the black, helped by a weaker yen, which has lost about a fifth of its value against the dollar since November.

The Kyoto-based firm said it expected to earn 55 billion yen ($553 million) in the year to March after reporting a 7.10 billion yen net profit in its latest business year.

The return to a net profit reversed a year-earlier shortfall of 43.20 billion yen, its first yearly loss since becoming a public company in the early Sixties.

Despite the improved results, the latest net profit figure was only about half of the 14 billion yen Nintendo has estimated in January.

Osaka-listed Nintendo closed up 4.64 percent at 11,950 yen before its results were released Wednesday.

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http://www.globalpost.com/dispatch/news/afp/130424/nintendo-operating-profit-hit-weak-console-sales