Nintendo net profits  (Source: WSJ)
Loss is due in large part to strong yen

Since the Wii console hit the market Nintendo has been dominating sales for hardware and traditionally does very well on software sales as well. Nintendo has been hit hard by different factors over the last year that has lead the company to some disappointing earnings reports.

Wall Street Journal reports that Nintendo has posted a significant loss for the quarter than spans April to September. The loss amounted to $24.7 million or 2.01 billion yen. During the same quarter last year, Nintendo posted a profit of 69.4 billion yen. The operating profit for the company slumped 48% to 54.23 billion yen from 104.36 billion in 2009.

A few causes conspired to drive Nintendo to its fist interim net loss in seven years. The down economy in the U.S. and other foreign markets was one contributing factor. Perhaps the larger contributing factor is the strength of the Yen right now. Nintendo reportedly has large cash deposits and other assets in foreign countries. When those assets and deposits are converted to yen for the net figures, Nintendo takes a significant hit due to the strength of the yen and weak currency abroad.

WSJ points out that the net loss will only be a real loss if Nintendo decided to convert those foreign deposits and assets into yen, which is has no reported plans to do. Nintendo has 62.1 billion yen in foreign assets and deposits that contributed to the net loss. Nintendo can’t blame all of its loses and weak sales on the economy and the strong Yen. Many consumers are not buying the existing DS portable consoles with the 3DS on the horizon and the Wii has lost some of its luster with sales dropping for the console.

During the quarter, Nintendo reportedly sold 6.69 million DS portable consoles for a decline of 43% compared to the same quarter of the previous year. Sales of Wii consoles slumped 14% to 4.97 million units compared to 5.75 million Wii's sold the same time in 2009. The Wii has sold 30 million units in the U.S. since it debuted.

Software sales are also declining with a 14% decrease to 65.21 million software units sold.

Nintendo has revised its estimates for yearly figures and expects a net profit of 90 billion yen with an operating profit of 210 billion yen for the year.

"It seems as though my state-funded math degree has failed me. Let the lashings commence." -- DailyTech Editor-in-Chief Kristopher Kubicki
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