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Nintendo Posts First Annual Operating Loss

4/26/2012 11:44:09 AM Eastern

Tokyo - Nintendo reported Thursday its first-ever
annual operating loss of  $460.9 million
(37.3 billion yen) as sales of its Wii and 3DS systems produced lower-than-expected
results.

For the fiscal
year, ended March 31, Nintendo reported a net loss of $532.5 million (43.2
billion yen) from a year ago, when the company reported a $958.9 million (77.6
billion yen) profit.

The video game
maker also reported a 36.2 percent drop in revenue to $8 billion (647.6 billion
yen), from more than 1 trillion yen reported on March 31, 2011.

The 37.3 billion
yen operating loss was slightly better than a predicted 41.4 billion yen loss
for the fiscal year.

Nintendo saw
depressed sales for its Wii, DS and 3DS game systems in the past year.

Sales of Wii
consoles dropped to 9.84 million during the fiscal year, from 15 million for
the year ending March 31, 2011, Nintendo reported.

Wii software sales
also declined to 102.3 million units, from 171 million a year ago.

The handheld Nintendo
DS game player saw sales drop from 17.5 million units a year ago to 5.1 million
units in past year, while sales of the newer 3DS sold 13.5 million units,
helped by a price cut from $249 to $169 that was necessitated by poorer-than-expected
sales last summer.

In addition to the
launch of some lackluster game titles at the launch of the 3DS, analysts
believe Nintendo's handheld gaming business has been adversely impacted by the
introduction of gaming apps on smartphones and tablets.

To correct the
loss, Nintendo said it will stop selling the 3DS below cost by the middle of
the fiscal year ending March 31, 2013, and will add more titles, including a
side-scrolling 2D New Super Mario Bros. 2 game and a new version of Animal
Crossing.

The video game
company is also counting on a strong showing from the launch of the new Wii U
console in Japan, the United States and Europe by the end of the calendar year.

Nintendo said the new
console will introduce a new style of home entertainment supported by a "unique
controller" that embeds a 6.2-inch touchscreen.

Nintendo said it
expects to see $10.1 billion (820 billion yen) in net sales and operating
income of $432.5 million (35 billion yen) and a net income of $247.1 million
(20 billion yen) by March 31, 2013.

Nintendo forecasts
sales of 18.5 million 3DS units and 10.5 million Wii consoles in the year
ahead.

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