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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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