Nintendo Sees $925 Million Net Loss in First Half of Financial Year, Predicts Yearly Loss

By Ed Silverstein October 27, 2011

Nintendo is seeing a net loss of $925 million for the six months of the financial year and it is further predicting a loss for the entire year, according to media reports.

The gloomy projection for the Japan-based company is being blamed on the “strong” yen and “a lack of hit game titles,” according to the AFP News Service.

The company’s sales dropped 40.6 percent in the first half of the year, the AFP adds.

In addition, for the first time Nintendo is predicting it will post an annual net loss of $264 million for the current fiscal year, according to MSNBC. The financial year ends in March 2012.

"Due to re-evaluation of assets in foreign currencies, exchange losses totaling 52.4 billion yen occurred," Nintendo said in a statement. That amount is equal to about $687,122,944.

In addition, the company said the drop was "due to a small number of hit titles overall, a decrease of both hardware and software sales." The company also blamed “price cuts in its 3DS handheld console, as well as the Wii home video game hardware,” The AFP said.

In addition, the company’s “earnings forecast has been modified to reflect the trends of stronger-than-expected yen appreciation,” the company was quoted by the AFP. The news agency explains that a stronger yen makes Japanese exporters less competitive. This comes on top of the nation’s economy getting impacted by the massive earthquake and tsunami which hit Japan in March.

But sales of Nintendo’s 3DS are getting somewhat better, according to media reports. During the first half of the year, the 3DS sold 3.07 million units and led to sales of 8.13 million software titles. The 3DS is a video game console has a 3-D screen that can be viewed without specially-made glasses, the AFP explained.

The company lowered prices on the console by as much as 40 percent to counter lower sales, the AFP adds.

TechZone360’s Erin Harrison reported in August that the “initial price cut” on the 3DS gave Nintendo a “boost to its bottom line after the company’s … first-ever quarterly loss.”

In addition, the company reports that 3.35 million units of the Wii home console and 36.45 million software titles were sold, the AFP said.

Nintendo has introduced 43 new titles for Japan, with 33 of them for the 3DS. Among them are four new titles for the Mario series and nine games for the Wii home console, The AFP said.

A new game console, the Wii U, will go on sale in 2012, MSNBC said. And among the upcoming games is the Super Mario 3D Land, MSNBC said.

As Nintendo tries to compete, its rivals include games from smartphones, tablet computers and social networking sites, The AFP adds.

Ed Silverstein is a TechZone360 contributor. To read more of his articles, please visit his columnist page.

Edited by Tammy Wolf

TechZone360 Contributor

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