Money Matters, Simplified.
Strong holiday sales fail to counter Nintendo's declining profits
by Jaspreet Virk - January 28, 2010 - comments
Despite the spectacular performance during the latter part of last year, Nintendo has failed to make up for the fall in profits posted earlier.
New York, January 28 -- Hammered by global economic slowdown, Nintendo has reported a fourth consecutive drop in profit.
The Kyoto, Japan-based video game company has posted a fall in profit by 23 percent for the three months ending Dec. 31. Its profit currently stands at 192.3 billion yen ($2.1 billion).
Reason behind fall in profit
According to Nintendo, the profits have plunged due to fall in sales of its video consoles during the initial quarters of last year.
Sales of company’s hardware had fallen drastically during the April-September period.
In order to curb declining sales, the company had introduced price cuts in late September. It had slashed the price of its motion-sensing Wii by $50 to $199.99 in United States, Japan and Europe.
Though the move was aimed at bolstering sales, price cut only squeezed company’s margins, leading to fall in profits.
Rise in sales fail to counter initial poor performance
Nintendo registered strong sales during the holiday season. Starting with the Thanksgiving week, company’s Wii remained in high demand.
Nintendo managed to sell 50,000 Wii’s during the Nov. 22-28 period in the United States. Even DS Lite and Dsi registered strong numbers as the two collectively sold more than 1 million units.
During the December period, Nintendo sold 3,810,000 Wii and 3,310,000 DS game consoles, thus outperforming rivals like Microsoft and Sony.
Even its game titles like Wii Sports Resort, New Super Mario Bros, Wii Fit, Wii Fit Plus, Mario Kart Wii, Wii Play, and Pokeman Platinum dominated the best sellers list.
Despite the spectacular performance during the latter part of last year, Nintendo failed to make up for the fall in profits posted earlier.
Sales for the first nine months starting April 2009 fell 23 percent to 1.2 trillion yen and net profit plunged 9 percent to 192.6 billion yen.
Full year forecast unchanged
Nintendo has not changed it forecast for the full year ending March 31.
According to the company, the net income will plunge 8 percent to 230 billion yen. It expects the sales to slide 3 percent to 20 million players for this fiscal year.
Further, revenues will fall 8 percent to 1.5 trillion yen, as stated by the company in October. Also the operating income will plunge 33 percent to 370 billion yen.