Nintendo Lowers Profit Forecast, Fears Loss of TrustBy Alex Co | July 29, 2011 | News | No comments | Share
In related news to the 3DS price cut we reported about earlier, Nintendo is cutting its profit forecast for the current fiscal year after a disappointing first quarter. The company’s net income for the year ending in March 31, 2012 is now projected at 20 billion Yen ($260 million), drastically down to its initial projection of 110 billion Yen ($1.4 billion). Nintendo also expects revenues to be 20 percent lower than what they previously estimated in the same period.
For the three months to June 30, Nintendo’s revenue dropped by a hefty 50 percent year-on-year to 93,9 billion Yen ($1.21 billion), leading to the company losing 25.5 billion ($328 million), compared to last year which was 25.4 billion Yen ($324 million).
All hardware and software sales are down as well. Wii console sales are down 49 percent compared to the year-ago quarter, with DS sales down 54 percent year-on-year. Wii software sales are down 52 percent, with DS software sales down 46 percent.
It’s also worth mentioning that Nintendo’s share price is currently at its lowest in five years. The firm has blamed the plummet in share price to a combination of different factors, namely -poor sales, unfavorable exchange rates, increased marketing spend and “expenses for research for new products like Wii U that will be released in 2012.”
In related news, Nintendo has also expressed concern that their latest 3DS price cut would result in a loss of trust among Nintendo customers.
Never in Nintendo's history have we dropped a system's trade price so significantly less than six months after launch, we are aware this may cause you, the loyal fans who supported Nintendo 3DS from the beginning, to lose trust in us, and this is not our intention in any way. All of you who have kindly supported Nintendo 3DS from the beginning are Nintendo's most important customers.Nintendo's statement on loss of trust
The price cut for the 3DS is mostly due to the portable under-performing globally, with only 700,000 units sold in the the period between its launch on February 26, to the end of the firm’s financial first quarter on June 30.
Not very good news for Nintendo. Hate to point it out, but the Wii and DS selling spree had to hit a ceiling at some point. The big question is will the Wii U meet the same fate or will it reinvigorate the company as the Wii did when it first launched?