Videogame giant Nintendo may be feeling the affects of the economic slowdown for the first time.
The game maker saw its first drop in profits in six years last year.
The maker of Super Mario and Pokemon games said Thursday that net profit for the fiscal year ended March 31 fell 18% to 228.6 billion yen ($2.5 billion).
Kyoto-based Nintendo Co., which does not break down quarterly numbers, said annual sales slipped 22% to 1.434 trillion yen ($15.4 billion).
Nintendo is expecting tough times to continue. It forecasts sales to fall 2.4% to 1.4 trillion yen ($15 billion) for the fiscal year through March 2011 and expects earnings to slide 12.5% to 200 billion yen ($2.2 billion).
But the company expressed confidence in the popularity of its game machines. It is banking on a handheld that allows for 3-D games without the need for special glasses and which is set to go on sale this fiscal year.
Nintendo is facing intense competition from Microsoft Corp. with its Xbox 360 and Japanese rival Sony Corp., which makes the PlayStation 3. Both are also bringing 3-D gaming to their home consoles although those games require special glasses.
Nintendo’s handheld may also face a challenge from smartphones like the iPhone, which are increasingly popular and offer games and other entertainment content.
Company officials have repeatedly shrugged off such concerns, including new fears about the threat from the iPad, saying that they know the game business, and appeal to a wide range of players, including the elderly, and both men and women.
Sales of the Nintendo DS portable series, including the DSi XL with larger screens, which went on sale overseas in March, totaled 12.3 million in the Americas breaking the game-machine sales record for the region, it said.
Worldwide, DS sales reached 27.1 million during the fiscal year, making for a cumulative 128.9 million sold, allowing it to surpass Nintendo’s Game Boy series, released in 1989, and up to now the top-selling handheld machine.
Nintendo acknowledged Wii home console sales struggled in the first part of the fiscal year, when consumer spending was weakened by the global financial crisis, but recovered for the crucial year-end shopping season.
For the year, Wii sales totaled 20.5 million for cumulative sales reaching 70.9 million the largest ever for game consoles for Nintendo.
The game maker said that a strong yen also eroded its performance for the fiscal year ended March 2010.
Nintendo is expecting to sell 30 million DS machines and 18 million Wii’s in the current fiscal year.
Nintendo reduced the price on the Wii the world’s top-selling home console to 20,000 yen from 25,000 yen in Japan and to $200 from $250 in the U.S. before the shopping season to boost sales volume.
Nintendo said it had success with its game software, including “Wii Sports Resort,” which sold 16 million worldwide, as well as “Wii Fit Plus” at nearly 13 million sold.
Nintendo shares slipped 3.3% to 30,650 yen ($330) in Tokyo trading.
So, Just So We’re Clear on this, $15 BILLION isn’t good enough.
Gotcha
(lecture)
I know it’s counter-intuitive, and that all profits should be viewed as a good thing, but a decline in profits is generally bad for a company for one very inportant reason: Investors. When you buy stock, you’re betting that the value of the company will increase and that the company itself will become more profitable. The more profit a company brings in, the more it can expand and produce. It also leads to higher dividends for stockholders due to an increase in the company’s capital.
So when profits decline, investors are less inclined to put their money with that company because the return on their investment isn’t as certain; which in turn drives the stock price down, lowering the overall value of the company.
That’s survivable for the short term, but if the company doesn’t turn profits around fairly quickly, Bad Things(tm) can start to happen.
(/lecture)
Lejon: Careful. You’ll get called a Communist for that kind of talk. And it won’t matter if you are one or not. After all, it’s not like the people who would call you that actually know what the word means. 😉
Well,
You cannot have it both ways. In my opinion (I am sure I will be called many things for this one!) the choices are as follows-
1. Control profits companies make thus removing freedom for some
2. Go completely communist
3. Go completely socialist
4. Drop all the old lables and old ways and do what is correct.
Our world economy is about constant growth in all areas. If there is not growth then cultures, businesses etc are considered stagnant and something to be avoided. The problem with this concept is that regardless if it is 50 years or 10,000 years we will eventually be “full” to capacity. The population keeps doubling, more resources used etc etc. When is enough enough-20,30,40 100 billion people? It is time to devleop a quality of life plan. In other words what is the maximum amount pf people allowed in any given area in order for all to have a chance at a equal life? I am not saying a free ride please note.
K9 – the problem is, people like to (over) breed. (Or more accurately, people like to perform acts that lead to breeding.) We aren’t going to hit some magical capacity number and stop – we’re going to blow right past it and keep going, until enough pressure builds up in the system to push the population back down. It sounds like you already know that, and would seek to prevent it (which is admirable), but unfortunately I don’t see it happening.