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Nintendo lowers shipping and profit forecast
By Michiyo Nakamoto in Tokyo
Published: October 1 2002 12:05 | Last Updated: October 1 2002 12:05
Nintendo confirmed growing worries about its performance with the announcement on Tuesday that shipments of its games consoles this year would be lower than initially forecast.
The group said shipments of GameCube, would be 10m rather than 12m and those of Game Boy Advance would be 15m rather than 19m, due to weaker than expected demand amid the Japanese economic slump.
Nintendo also lowered its full-year recurring profit forecast from Y150bn ($1.23bn) to Y110bn and net profit from Y90bn to Y80bn.
Nintendo said, however that shipments of GameCube software would be 55m units rather than the forecast 36m because third party games had been selling better than expected.
In the first half, Nintendo expects a sharp drop in recurring profits, or 77 per cent below its initial forecast, due to the yen's rise against the US dollar.
Nintendo said that its first half group recurring profit would be Y7bn rather than an initially forecast Y30bn due to a large appraisal loss on foreign currency based assets.
However, Nintendo still expects to achieve its forecast group net profit of Y18bn in the first half, thanks to a one-off gain from its sale of Rare, the game developer. Nintendo has sold its 49 per cent stake in the games developer to Microsoft.
Satoru Iwata, president, said the group aims to raise its share of the US market from 20 per cent, to over 30 per cent after the Christmas shopping season but had no intention of reducing the price of GameCube, its latest console.
Nintendo has had a difficult time with its new consoles, which have not had the big push from popular titles that is crucial for hardware sales.
In particular, Super Mario Sunshine, the latest game developed by games legend Shigeru Miyamoto, has not lived up to the initial high expectations that had built up around it. This is one of GameCube's most important titles and was launched in August, but it has not seen the huge following Mr Miyamoto's titles have enjoyed in the past.
"We are concerned that [technical and design problems] may keep the game from becoming the perpetually best-selling, 10-million unit classic that Super Mario 64 was," said Noriko Manabe, games analyst at JP Morgan in Tokyo.
Ms Manabe is also concerned that Super Mario Sunshine did not seem to be "moving that much hardware".
The concerns about Nintendo's software line-up were aggravated by its decision to sell its 49 per cent stake in Rare, which had provided many of Nintendo's hit games in the past. Although Rare has not delivered as significantly recently, the sale, "almost guarantees that XBox is going to be number 2 in Europe," said Ms Manabe.
Nintendo lowers Shipping estimates; Mario sales expectations not met
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