Nintendo Co. Ltd. posted a 61-per-cent drop in quarterly operating profit on Thursday and forecast a ¥45-billion ($580-million U.S.) operating loss for the year to March, far worse than market expectations, hit by weak sales and the strong yen.
The full-year operating loss will be the first since the company started announcing earnings in their current form in 1981. The company blamed yen strength and weaker-than-expected sales.
The creator of the Super Mario franchise dominated the video games industry for years with its DS handheld players and Wii home consoles, but is now struggling to keep up with more versatile gadgets like Apple’s smartphones and tablets.
It cut its annual forecast for its aging Wii console to 10 million devices from 12 million, and for the 3DS handheld games device to 14 million from 16 million.
“We had higher expectations for the year-end season, but failed to meet them,” president Satoru Iwata told reporters in Osaka.
Poor sales forced Nintendo to slash the price of its much-anticipated 3DS handheld games device in August, only six months after its launch.
The move halted its record of making profits on games hardware as well as software, a business model that took operating income to a high of ¥555-billion in 2008/09.
Nintendo also faces harsher competition in the home console market from Sony Corp.’s Move and Microsoft Corp’s Kinect.
Profit slumped to ¥40.9-billion for the traditionally strong October-December period, compared with a consensus estimate of a ¥52-billion profit, based on a survey of three analysts by Thomson Reuters I/B/E/S.
Shares in Nintendo have halved to below ¥11,000 since the beginning of the financial year in April, hit by the 3DS flop and market disappointment with the Wii U next-generation home console, unveiled at the E3 games show in June and set to go on sale in the second half of this year. At their peak, in late 2007, the shares traded at ¥73,200.
Last week, its shares fell to ¥10,020 yen, their lowest since April 2004, before either the DS or Wii were launched.