Nintendo Posts First Half-Year Loss in Seven Years

Nintendo Co., the makers of the popular Nintendo Wii and DS video game systems, posted a $24.7 million (2.01 billion yen) first-half loss, marking the first time since 2003 that the gaming giant failed to turn a profit.

Nintendo Co., the makers of the popular Nintendo Wii and DS video game systems, posted a $24.7 million first-half loss, marking the first time since 2003 that the gaming giant failed to turn a profit. Photo: David/Flickr

Up until recently, it was reasonable to say that the last few years had been relatively kind to Nintendo. The Japanese company’s Wii gaming console was a hit among demographic groups ranging from kindergartners to nursing home residents, and the DS was a solid performer in the mobile gaming market.

However, if the last six months are any indicator, the company may be facing some tougher times heading into 2011. Nintendo Co. posted a $24.7 million first-half loss, marking the first time since 2003 that the gaming giant failed to turn a profit.

According to AP Business Writer Yuri Kageyama, Nintendo saw sales drop by more than one-third during the period. The company, which produces such popular video game titles as Super Mario Galaxy and Pokemon Diamond and Pearl, did not post second quarter profit figures, but after reporting fiscal results for the six month period ending on September 30.

BBC News is reporting that Nintendo “is forecasting that its annual profit will drop to the lowest level in six years, as sales of the Wii console decline for the second year in succession.”

The delay of their new 3DS handheld system until February in Japan and March in Europe and the United States is also likely a contributing factor, as the new 3D-capable hardware will miss the 2010 holiday shopping season.

“It reaffirms for us the deteriorating profit trend,” Jay Defibaugh, an industry analyst with MF Global in Tokyo, told Nathan Layne of Reuters on Thursday.

“Half of that is forex, but the other half is the fact that they are on a slippery slope for both of their key product lines, DS and Wii.”

Nintendo spokesman Yasuhiro Minagawa also blamed the losses in part on the strength of the yen, telling Kageyama that it hurt earnings from international markets and helped drive down first-half sales by $345 million, or 28.1 billion yen.

In late September, shortly after announcing the scheduled release dates for the 3DS unit, Nintendo lowered their sales and profit expectations.

In revised figures, they reported that they anticipated $1 billion in profit through March 2011 (down from previous projections of $2.4 billion) and dropped sales estimates for the Wii and DS from a combined 48 million units to 41 million units. [via Wall Street Journal]

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