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Business – Nintendo cuts forecast as Wii loses sparkle

David Dolan

TOKYO (Reuters) – Nintendo Co Ltd reported a 52 percent slide in quarterly profit on Thursday and slashed its full-year forecast, as the Wii console loses its title as the videogame platform to beat.

Demand for Nintendo’s family-friendly games has cooled as rivals Sony Corp and Microsoft Corp bolster their catalogue of games that appeal to die-hard players.

Nintendo’s portable game machine, the DS, increasingly faces competition from Apple Inc’s iPhone, which has become a popular platform for handheld games. And like other Japanese exporters, Nintendo has been hit by the stronger yen , which eats into overseas profits.

The firm slashed its annual sales forecast for the Wii by nearly a quarter, and in an attempt to reignite demand, said it would roll out a large-screen version of the DS.

But that is more of a “sideways move”, instead of a real product advance, said Hiroshi Kamide, an analyst at KBC Securities in Tokyo.

“A lot of what they’re doing seems to be old hat, and therefore what we need to hear is more information about their ideas going forward,” he said.

“There is still life in the current platforms with the content they can generate themselves, but there is a need for the company to demonstrate that there are new products going forward.”

PLATFORM WARS

In September, Sony’s PlayStation 3 usurped the Wii to become the top-selling U.S. videogame console for the first time since its release, according to research group NPD.

The Wii dominated the global gaming industry for the past three years, as its motion-sensitive controller and cartoonish sports games wooed casual gamers, who normally avoid the fast-paced and intricate titles that appeal to die-hard fans.

But analysts worry that such demand may be waning.

“Nintendo would need to devise and establish a business strategy capable of driving structural change within the industry in order for us to turn bullish on the shares,” Mia Nagasaka, an analyst at Barclays Capital, said in a research note this month.

Sony’s PlayStation 3 is expected to get another boost in December when Square Enix Holdings Co launches the latest instalment of its blockbuster “Final Fantasy” series of role-playing games.

Nintendo last month announced a 20 percent cut in the Wii’s price, responding to similar cuts by Sony and Microsoft.

Nintendo posted an operating profit of 64 billion yen ($709 million) in the July-September quarter, compared with 133 billion yen a year earlier.

That was also lower than an average of 90 billion yen in a poll of four analysts by Thomson Reuters I/B/E/S.

Reuters calculated the quarterly figure by subtracting Nintendo’s first-quarter results from the first-half figures released on Thursday.

Nintendo cut its operating profit forecast for the year to March 2010 by a quarter to 370 billion yen, ending a three-year run during which it booked a record profit.

Analysts are expecting a full-year profit of 442.8 billion yen, according to Thomson Reuters I/B/E/S.

Shares of Nintendo finished down 1.1 percent ahead of the results.

The stock has declined about 28 percent so far this year, compared with a 14 percent rise in the Nikkei 225 share average.

(Reporting by David Dolan; Editing by Chris Gallagher and Joseph Radford)

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October 29, 2009 - Posted by | Uncategorized |

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