Nintendo preparing 3D push
Tokyo - Japanese video game and console maker Nintendo Co reports earnings for the April-June quarter on Thursday. The following is a summary of key developments and analyst opinion related to the period.
Overview: Nintendo's video games and consoles - the Wii and portable DS - continue to dominate sales rankings but momentum is moderating. To spur demand, the company cut prices of the DS in June. Now the company is starting to shift gears to try to outmanoeuvre rivals like it did back in 2006, when it first released the motion-controlled Wii.
Amid considerable buzz, it unveiled in June the 3DS, a 3D version of its handheld device that does not require glasses. It is also switching its focus to core gamers as competition for casual gamers intensifies from rivals like Apple Inc, Sony Corp and Microsoft Corp.
By The Numbers: Nintendo is forecasting sales to fall 2.4% to ¥1.4 trillion ($15.9bn) for the fiscal year through March 2011 and expects net profit to slide 12.5% to ¥200bn. By unit, it predicts it will sell 18 million Wii consoles this year, down from 20.5 million IN 2009. It pegs DS sales to rise to 30 million units from last year's 27.1 million. A stronger yen could also drag its bottom line.
Analyst Take: Atul Goyal, a tech analyst at CLSA, recently upgraded his rating on Nintendo to "outperform".
"Its efforts in 3D are among the best, albeit on a small screen," he said in his report. He expects lower DS software sales to shrink earnings this fiscal year through March 2011, and weaker Wii software sales to hurt results next year. Profits should then start growing again due to the 3DS.
What's Ahead: The 3DS will easily be Nintendo's biggest release this year. The company says the launch will happen this fiscal year, meaning sometime before the end of March. As for a 3D Wii, CEO Satoru Iwata has said the company would wait until higher household penetration of 3D TVs.
Stock Performance: Nintendo's stock fell 16% during the April - June quarter, in line with a 15% decline in the Nikkei 225 stock average. The issue rose 2.8% to ¥25 000 on Wednesday on the Tokyo Stock Exchange.