Nintendo, the makers of the Wii gaming console, has slashed its sales forecasts for the highly popular game from 27.5 million units to 26.5m after reporting a 33% fall in profits
According to the UK Times overseas earnings have been eroded by unfavourable exchange rates, as well as the drop in consumer demand as a result the Company that is a darling of the Tokyo Stock Exchange has slashed its profit forecast for the 12 months to the end of March by 16% to A$9.6 billion. In contrast, Sony with eight times the turnover of Nintendo will make a A$4.4 billion loss for the year. (See Sony woes story here).
Nintendo had enjoyed demand for both the Wii – whose wireless controllers appeal to a broad audience – and its DS handheld game player. Some analysts had expected the company to announce that it would sell more Wiis than expected, thanks to the popularity of games such as Wii Sports and Mario Kart Wii.
According to the Times analysts described Nintendo’s guidance as a “baffling and potentially very worrying” sign for worldwide sales of the Wii as recession curtails household spending around the world.
“Today’s revision suggests that the roaring pace of Wii growth that we’ve seen until now may be over,” Hiroshi Kamide, a KBC Financial Products analyst, said.
“The numbers also imply that we are going to see a sudden collapse in the fourth quarter from record margins to some of the thinnest margins Nintendo has experienced for three years.”
Mr Kamide, who had been the only major analyst with a “sell” recommendation on Nintendo, said that, given how much the company speaks to retailers around the world, the downgrade could imply that “they know something big has gone wrong, and that people are not buying the machines”.
Part of the problem, according to games industry insiders in Japan and the UK, is that the pipeline of “must-have” Nintendo Wii software is less strong now than it was six months ago.
For more on this story see www.times.co.uk
