Nintendo to Post First Annual Loss in 30 Years

Posted by at 11:40 am on October 27, 2011

Nintendo has posted a huge loss for the first six months of the fiscal year and expects the first annual loss in more than 30 years. While better than feared, the video game maker netted a loss of ¥70.27 billion ($923 million) in the six-month period ending on September 30, which compares to a loss of ¥2.01 billion yen just a year earlier. This is due to a mixture of factors, including slowing sales of the Wii, a weak global economy, and a comparatively strong yen that is bad for export profits.

For its full-year forecast that ends in March, 2012, Nintendo now forecasts a net loss of ¥20 billion ($264 million), which is the second revision in six months, both of them in a downward direction. The new prediction is twice that of the one in July, which forecast a ¥35 billion loss. This is the first annual loss since it started reporting consolidated earnings in 1981. Because it does its accounting based on Japanese standards, Nintendo doesn’t post quarterly results.

Also, end users are facing more distractions for their leisure time, Nintendo President Satoru Iwata acknowledged, with smartphone games on the iPhone, iPod touch, and Android being big contributors. In the home, the Nintendo Wii​ is outdated and doesn’t offer HD gaming like its main competitors, the PS3 and Xbox 360. Microsoft and Sony have brought their own versions of body movement controllers and interfaces with the Kinect and PlayStation Move, respectively, partly negating Nintendo’s main advantage

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