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Business

Nintendo slashes profit forecast by 55%

Text by News Wires

Latest update : 2010-09-29

Nintendo drastically slashed its profit forecast Wednesday citing the strong yen and cut its sales projections. The company’s Nintendo 3DS will also not hit stores in time for Christmas, with the release date now set for March.

AFP - Videogame giant Nintendo on Wednesday slashed its profit forecast and cut sales projections for the year to March 2011, citing the recent strength of the yen, among other factors.
  
The maker of hit series "Super Mario Bros" cut estimates for full year net profit by 55 percent from 200 billion yen (2.38 billion dollars) to 90 billion yen and predicted net sales to fall from 1.4 trillion yen to 1.1 trillion.
  
"The earnings forecast has been modified to reflect the trend of stronger-than-expected yen appreciation, current sales performance, the sales outlook for the holiday season and the decided release conditions for the Nintendo 3DS," it said in a statement.
  
The company said earlier Wednesday that its new-generation handheld 3D console would go on sale next February, missing the Christmas shopping season.
  
The strong yen has hurt Japan's exporters, making their goods more expensive and eroding overseas profits when repatriated.
  
Nintendo said it had made its previous forecast assuming an exchange rate of 95 yen per dollar and 120 yen per euro, but has been forced to revise this to 85 yen versus the greenback and 110 yen to the single currency.
  
The Japanese unit was trading at 83.68 to the dollar and 113.99 to the euro in Tokyo trade Wednesday.
  
Japan stepped into the currency markets on September 15 for the first time since 2004 in a bid to help hamstrung exporters, but the dollar has since unwound more than half its post intervention gains.
  
In July Kyoto-based Nintendo said it sank into the red for the three months ended June as the yen's recent strength ate into profits and as it cut the price of its popular DS handheld console.
  
It also said at the time that lowering prices of its hardware amid a sales slowdown was pressuring net sales and operating income.
  
As the impact of machines such as the DS and Wii eventually fade within a saturated market, analysts have said Nintendo's next move will determine whether it still has the ability to lead the industry.
  
But with the Nintendo 3DS, which can show 3D images without the need for special glasses, making its Japan debut in February, the games giant will not see an end of year lift to sales that the console's release will bring.
  
The device will launch on February 26 and cost 25,000 yen (290 dollars), chief executive Satoru Iwata told a news conference in Chiba, near Tokyo.
  
It will be launched in the United States, Europe and Australia in March.

Date created : 2010-09-29

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