Nintendo Missing Profit Target?

[Bond]

MISSING PROFIT TARGET?

Analysts said the poor performance of its GameCube operations, especially in high-margin software sales, and the yen's rise against the dollar were expected to weigh on the game exporter's profit for this business year.

Hit by the strong yen and slack demand for its game systems, Nintendo in October slashed its net profit forecast for 2002/03 by 11 percent to 80 billion yen ($676.2 million), based on an exchange rate of 123 yen per dollar versus the current 118 yen.

For Nintendo, which holds hefty foreign-currency-based assets, each one-yen drop in the dollar trims 3.5 billion yen from non-operating profit, in addition to the negative impact on operating profits in yen terms, analysts said.

Iwata agreed that the yen's current level was a negative factor but said it was too early to revise profit forecasts as the Game Boy Advance's performance was solid and new Pokemon games due in North America in March should give it a boost.

As worries mount over the GameCube's outlook, Nintendo shares fell this week to 10,090 yen, the lowest in nearly four years.

They have fallen 50 percent over the past year, underperforming a 15 percent decline in the benchmark Nikkei average and in the industry index

Iwata said that he was not satisfied with the stock price.

"Given the slumping Tokyo stock market as a whole, it's not only Nintendo's problem. But it's my duty to bring good results to investors," Iwata said.

Nintendo, which bought back 4.65 million of its own stock during the October-December period, would buy back shares when the stock fell excessively, but it needed to raise profits in its core business to shore up the price over the long term, he said.

Investors want to see new ideas before pushing the stock up.

"Nintendo's GameCube is way behind Sony's PlayStation and looks to lose out to the (Microsoft) Xbox as well, and with no new products in the pipeline, it's hard to see where the growth will come from," said Takehiko Takachio, senior portfolio manager at Kokusai Asset Management.

"But Nintendo is still a company with great development capabilities, and I don't think the GameCube is going so bad that they will have to follow the road that Sega took in withdrawing from hardware," he said.

Iwata dismissed speculation that the company would eventually abandon home console production.

"When we withdraw from the home game console, that's when we withdraw from the video game business," he said.

Press Release

Nintendo announced this after announcing GC's successor.

[Dyne]

Damn, I gotta preorder me some of those Mario Hanafuda cards tomorrow then.

EDIT: Hey, why not. Here's some goodness--Nintendo's stock value compared to the others in Japan. Note this is still after it's 45% drop.

Nintendo Co., Ltd. 10,850
Sony Corp. 5,060
Sega 889
NAMCO, LTD. 1,981
KONAMI CO., LTD. 2,585
Capcom 1,723
BANDAI CO., LTD. 3,850
KOE 2,820
Square 1,710
ENIX 2,005
KONAMI JPN 1,600
KONAMI Sport 1,997
KONAMI computer entertainment Osaka 990
KONAMI computer entertainment Tokyo 1,320
Broccoli 131
Van Presto 1,260
Aruze Corp. 1,690
TAKARA Co., Ltd. 933
Tommy 870
Hudson 545
Sun Electron 600
Tecmo, Inc. 907
Atlas 500
PCCWJ 83
Imagineer, Inc. 520
SETA 145
Sammy, Inc. 2,705
Kadokawa Shoten Publishing 1,759
JASU Tech 1,290
YUKUSU 600
TOSE 909
SOFUMAPPU 405
CSK 2,315 CORP.
TOPIX 865.43

Yes, a video game company has more than Sony as a whole. Isn't that encouraging?

[Jason1]

I really dont see why they are panicing...I mean sure PS2 is whoping everybody's ass, but GameCube is still ahead of XBox worldwide...and we cant forget the profits that they are surly making from the AGB, which has no competition.

[fingersman]

Bah........like I said Nintendo needs to change some of their tatics within the market place..............if they want to be extremly sucessful.

Well atleast they are releasing their next console the same time as Sony's , atleast that's what they are saying.

[Tombor]

Xbox has recently, just barely, surpassed Gamecube for second in worldwide install base.

Sony is a LOT bigger than Nintendo. Sony is somewhere in the 50-60 billion range. Nintendo was 27 billion last I saw (Buisness week listed them on a consumer game lists). Nintendo offer fewer number of stock than Sony that's why the price is higher.

[surfin4lifer]

Originally posted by Tombor
Xbox has recently, just barely, surpassed Gamecube for second in worldwide install base.

Sony is a LOT bigger than Nintendo. Sony is somewhere in the 50-60 billion range. Nintendo was 27 billion last I saw (Buisness week listed them on a consumer game lists). Nintendo offer fewer number of stock than Sony that's why the price is higher.

Well if you think about it Sony doesn't make just hte ps2. It makes a **** load of other electronic equiptment which is probably most of its profits. Nintendo is mostly just game profits. If you really want to compare it that way then xbox would be out on top b/c microsoft makes much more money.

[Bond]

Originally posted by surfin4lifer
Well if you think about it Sony doesn't make just hte ps2. It makes a **** load of other electronic equiptment which is probably most of its profits. Nintendo is mostly just game profits. If you really want to compare it that way then xbox would be out on top b/c microsoft makes much more money.

Actually the Playstation/Playstation 2 is Sony's highest selling product ever.

[Perfect Stu]

Originally posted by surfin4lifer
Well if you think about it Sony doesn't make just hte ps2. It makes a **** load of other electronic equiptment which is probably most of its profits. Nintendo is mostly just game profits. If you really want to compare it that way then xbox would be out on top b/c microsoft makes much more money.

PS2 contributed to more than half of Sony's 2002 profits