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Gadgets Nintendo Reports $24.7M Net Loss
Shane McGlaun (Blog) - October 28, 2010 9:41 AM
Print 57 comment(s) - last by Lazarus Dark.. on Oct 31 at 5:04 PM

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.

The 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.

The 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.

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Still an incredible run
By tviceman on 10/28/2010 10:11:24 AM , Rating: 5
Sales may be slumping now, but there is no other way around it - Nintendo made a huge, huge comeback with Wii. The Gamecube sold like crap and people were starting to write Nintendo off as the next console hardware victim until the surprisingly successful Wii showed up. My wife and I haven't played ours in about a year, but Epic Mickey will be out in a month and we're both excited for it.




RE: Still an incredible run
By Anoxanmore on 10/28/2010 10:21:41 AM , Rating: 4
We require more Zelda. :)


RE: Still an incredible run
By sprockkets on 10/28/2010 3:25:39 PM , Rating: 2
"We require more minerals."

- Cerebrate


RE: Still an incredible run
By JonnyDough on 10/28/2010 5:02:05 PM , Rating: 2
"We require more lube."

- Your mother

Sorry, couldn't resist.


RE: Still an incredible run
By B3an on 10/28/2010 10:59:59 PM , Rating: 2
No we dont. Nintendo need to make original titles, not milk the same old **** for decades. The Wii already has by far the worst library of quality games. Most of them seem to have production values of about $50 as well, and as with the OP most people seem to let there Wii collect dust shortly after they have got one.


RE: Still an incredible run
By CZroe on 10/29/2010 2:24:59 AM , Rating: 5
Consumers have proven time and time again that you are wrong. Franchises sell. New IP struggles. Nintendo's franchises are particularly strong AND of very high production value and remain very original at the same time. I appreciate their completely original games as well, but give me another equally original Kirby, Metroid, Zelda, or Mario any day.

Did you notice the new Kirby's Epic Yarn? Nothing like it elsewhere. Take that example... They've been innovating with Kirby all along. Kirby Tilt 'n' Tumble on the Game Boy Color was a tilt-controlled original long before motion gaming hit consoles. They demonstrated using a similar cartridge in a Game Boy Advance with a Gamecube connection cable to control a motion game with action that goes between the personal and shared displays. Even though Kirby started out as a platformer, there have been pinball, puzzle, racing, party, touch, and motion games, and that's not even counting cameos (Super Smash Bros.) or sequels (Kirby's Dream Land 2).

People have been saying that about Nintendo all along and it's just not true. Bongos, microphones, touch screens, motion controls, Nintendo's been changing the way we play all along. They've been making original games as well, like Pikmin, Chibi-Robo, Nintendogs, and more. Did you know that Chibi-Robo was supposed to be another one of their accessory games for the GCN? That's right. It was supposed to be played with an IR pointer remote that ultimately became the Wii Remote. They recognized the importance and knew that it was destined for more than being used for a subset of the GCN's total market and, thus, the Gamecube "1.5" was born (Wii). It's specifically their trailblazing and risk taking that is advancing the industry and yet you deliberately turn a blind eye to it and criticize them for exactly what they excel at.

As for low production values, you're thinking of casual games, like Wii [Sports/Play/Music/Sports Resort/Party]. Play a hardcore gamer's game from Nintendo and say that. You can't deny the extremely high production values in Super Mario Galaxy, Kirby's Epic Yarn, Zelda: Twilight Princess (a direct Gamecube port with no graphical enhancements), Metroid Prime 3 Corruption, and more.

You can stop repeating the same garbage that you heard online in the years since Sony started dominating. That era has passed.


RE: Still an incredible run
By gamerk2 on 10/28/2010 12:33:59 PM , Rating: 3
The Wii has the same exact problem as the Cube did: Lack of third party support.

Besides, "Jab, Slash, and Stab" gets really old after the 10th game or so. The gimmick has worn off, and Microsoft and Sony will see big losses over Kinnect/Move for that very reason (nevermind they have no idea what their fanbase wants).


RE: Still an incredible run
By Hiawa23 on 10/28/2010 1:29:22 PM , Rating: 3
Besides, "Jab, Slash, and Stab" gets really old after the 10th game or so. The gimmick has worn off, and Microsoft and Sony will see big losses over Kinnect/Move for that very reason (nevermind they have no idea what their fanbase wants).

I think Sony MS knows exactly what their fans want, here's the problem. Sony MS can't get the marketshare or install base they want without trying to appeal to the casual market. I think both know what they are doing. They are in business to make money, not make you happy, & they see it in the casual realm, as the casual market probably is twice the size of the hardcore market. I see no reason why they can't make games for their base & the casual market. Like Nintendo said we can't just run our company for the hardcore only. Well, I guess MS Sony can't do that either if they want to get some of the Wii's crowd.


RE: Still an incredible run
By sprockkets on 10/28/2010 3:38:27 PM , Rating: 5
Yes. Aiming literally at the screen, throwing, or using it as a fishing rod and reeling stuff in, also got old.

Yes, I would much rather go back to hitting buttons. So much more involving.


RE: Still an incredible run
By nikon133 on 10/28/2010 4:50:57 PM , Rating: 4
I gave you +1 because I like your sarcasm, but I actually don't agree with you.

Problem with current move/kinect/... games is not that they swap button mashing with hand waving... but that they don't have much more in them beside hand waving. My wife seems never to tire of killing bugs with Move, but I'd rather do some tactical destruction with my mates with Bad Company 2; even if I'm just mashing buttons, I still have to think how I'm mashing them, while bugs killing bugs can't go further than a little exercise.


RE: Still an incredible run
By sprockkets on 10/28/2010 5:40:53 PM , Rating: 2
Well, with the Wii you got buttons, aiming, and now the plus enhancements, the GC controller for times it works better like for Super Smash Bros, the classic controller, etc.

If anything, I just like the fact that each hand can be separate and not together.


RE: Still an incredible run
By acer905 on 10/28/2010 6:17:25 PM , Rating: 3
Perfect Kinect setup

Part 1) Empty room - easy to find/create

Part 2) Kinect motion capture interface

Part 3) Classic VR helmet

Part 4) "Gun" shaped controller (trigger button, load button, removable clip, nothing else needed)

Part 5) FPS designed for use with Kinect, VR helmet, and "Gun" controller.

Result) VR puts you into the game, your moves are recorded by Kinect and you move through the game, you raise your gun, point at your enemy, and shoot.

Gimmick, or the future of FPS?


RE: Still an incredible run
By seamonkey79 on 10/28/10, Rating: 0
RE: Still an incredible run
By acer905 on 10/28/2010 9:39:02 PM , Rating: 2
Care to give a reason why? Isn't the point of an FPS to make it as real as possible?


RE: Still an incredible run
By jordanclock on 10/28/2010 10:56:50 PM , Rating: 2
The point is to make it as FUN as possible. Realistic or unrealistic are just methods to that end.


RE: Still an incredible run
By acer905 on 10/28/2010 11:23:19 PM , Rating: 3
So then wouldn't it be more fun to be in the game, rather than looking at a screen pushing buttons...


RE: Still an incredible run
By Aloonatic on 10/29/2010 4:15:15 AM , Rating: 2
quote:
Part 1) Empty room - easy to find/create

This might be the one area where MS find it hard to get Kinect to work outside regions where land is cheap and houses are huge, with may rooms where no one is having to share. In Europe,Japan built up areas in the USA even, what you say just isn't true.

It's a shame, as I really like what MS has produced with the Kinect.

Sadly though, many kids playing their xBoxes in their tiny bed rooms aren't going to be able use it properly, and many wont even be able to use it if the convince their parents to let them use it in the living room, assuming that there is the space there too, which is by no means certain, so small are many many homes in more densely populated areas. How long are mum and dad going to be happy to let their kids take over the living room as they flail about and talk to their kinect?


RE: Still an incredible run
By Lazarus Dark on 10/31/2010 5:04:53 PM , Rating: 2
they really needed an updated Wii by now though, Sony and MS have each upgraded hardware like 3 times.

They needed to put out a WiiHD with bluray or at least HD support for HD Netflix and such. It's too late now though. They need a Wii2 out next Christmas, It's time. Yes, the 3DS will be out first quarter, which is probably why they haven't got a new Console to show, they've been focused on DS hardware (which, granted, HAS had several hardware updates in the last couple years, though really not more than different screen sizes as far as I can tell). The 3DS will put them back in the black (not that they are really in the red), but at the very least, they need to be showing some kinda new console news by E3 2011. Hardware is sexy, and people need new hardware to be reminded that Nintendo is still in the game and innovating. They need to severely update the controls, the Wii was great, but not the be-all end-all, there is still tons of controller improvement to be made in my opinion (and I don't think Move or Kinect has it either).


Very sad
By bug77 on 10/28/2010 11:23:07 AM , Rating: 5
quote:
quarter than spans April to September


They don't make quarters like they used to... :-(




RE: Very sad
By invidious on 10/28/2010 3:58:35 PM , Rating: 2
april may june july august september. Thats too many to count on one hand. 12/4=6?


It Prints Money!!!
By bunnyfubbles on 10/28/2010 9:55:22 AM , Rating: 2
They must have just run out of ink.




RE: It Prints Money!!!
By Hieyeck on 10/28/2010 9:59:33 AM , Rating: 4
Have you SEEN prices on ink cartdiges these days?


Is there any Wii2 on the way ?
By Silver2k7 on 10/29/2010 12:57:06 PM , Rating: 2
The Wii has been here for 4 years, so well some games are kind of fun.. but it was weak in the graphics department when it was first released.. and it still is.

A new Wii 2 with better graphics would be something that I might actually buy.




They will make it back
By rocky12345 on 10/28/10, Rating: -1
RE: They will make it back
By superPC on 10/28/10, Rating: -1
RE: They will make it back
By Wererat on 10/28/2010 10:33:35 AM , Rating: 2
Personally, I find the modern Xbox/PS3 controller with a cluster of buttons, short-throw analog sticks, and analog triggers to be a gimmick as opposed to mouse/keyboard or long-throw joysticks, wheels, or natural-motion controllers.

However, I never liked Stargate back in the 80s either, so YMMV.

I do think Nintendo has recently faltered in finding AAA titles, which has hurt them. I don't think it's the control mechanism per se.


RE: They will make it back
By superPC on 10/28/2010 10:52:35 AM , Rating: 2
http://en.wikipedia.org/wiki/Stargate_(film) stargate was released in 1994.


RE: They will make it back
By Indigo64 on 10/28/2010 12:30:38 PM , Rating: 2
http://en.wikipedia.org/wiki/Stargate_(video_game)

Stargate was released in 1981. You're showing your age, "super"pc.


RE: They will make it back
By nvalhalla on 10/28/2010 1:00:28 PM , Rating: 2
Arrgg... You beat me to it! I knew what he was talking about. Here's what he was referencing, for you kids...
quote:
The control system of Stargate expands on that of the Defender arcade game. It has a joystick to move up and down, a 'Reverse' button to toggle the player's horizontal direction, and a 'Thrust' button to move in that direction. There is also a Fire button for shooting, a button to activate a smart bomb, a button to turn on the Inviso cloaking device, and a hyperspace button which teleports the player to a random position in the level, at a risk of either exploding upon rematerialization, or materializing onto an enemy or enemy projectile.


It was a LOT of buttons for it's day.


RE: They will make it back
By xkrakenx on 10/28/2010 1:56:02 PM , Rating: 2
I wasted so many quarters. Then came Sinistar.


RE: They will make it back
By roadhog1974 on 10/28/2010 10:58:33 PM , Rating: 2
epic.


They can't beat Apple
By Tony Swash on 10/28/10, Rating: -1
RE: They can't beat Apple
By StevoLincolnite on 10/28/2010 11:09:15 AM , Rating: 5
Oh for petes sake.

This article has nothing to do with Apple and yet you still flaunt it like it's the second coming.

Little heads up: Apple doesn't compete in the home console market, they tried once... It failed! End of story.

So you know exactly what I am talking about:
http://en.wikipedia.org/wiki/Apple_Bandai_Pippin

Yep, couldn't even sell 50,000 units. *Rubs it in more*


RE: They can't beat Apple
By kmmatney on 10/28/2010 12:41:56 PM , Rating: 1
Well - I have 3 kids in elementary school, and all their friends are getting iPod touches and not playing their NDS so much anymore. So, I can say from first-hand experience that the Ipod touch is cutting into the Nintendo handheld market. I don't think the Wii is effected, but certainly the NDS and DSi market is.


RE: They can't beat Apple
By torpor on 10/28/2010 12:24:05 PM , Rating: 5
In further news, the reason GM is losing money is because they can't compete with the Apple product line.

Obama's approval rating is suffering because he has a Zune.

American banks are failing due to Apple's recent iPhone update.

German resurging nationalism is due to the opening of a new Apple store in Heidelberg.

Whatever it is I think I see, becomes a Apple paean to me


RE: They can't beat Apple
By DKantUno on 10/28/2010 2:30:02 PM , Rating: 2
I don't ever (and CAN'T) see the iPod Touch as a genuine competitor to the DS or any other 'serious' handheld gaming device. But to think of it practically, once you buy a kid a single handheld device which CAN also play games:
a) Isn't that enough 'cool' to last a couple of seasons? They probably won't ask for ANOTHER portable system for some time, unless they're REAL desperate, serious gamers, or just plain cranky.
b) Unless you're super-rich, even if the kid asks you, you're probably going to say "But you already have one!"

So there may, just may, be a valid argument in there about iPod Touches eating into handhelds market share.

But is it directly responsible for these latest numbers? I don't think so.

Btw, Nintendo is still doing pretty well if you look at the gross units sold. So it's a little depressing that in spite of pretty much having owned the consoles market for the last few years, they still end up reporting losses. (Yeah I read that part about overseas assets etc. But STILL..)

Think about the small guys, publishers, developers....yikes.


RE: They can't beat Apple
By eskimospy on 10/28/2010 9:14:32 PM , Rating: 1
Seek professional help. You're way too old to be acting like this.


lame excuses
By superPC on 10/28/10, Rating: -1
RE: lame excuses
By Motoman on 10/28/2010 10:10:25 AM , Rating: 3
If motion control was a gimmick, no one else would be doing it.

Anyway, I reckon the reason the US economy is mentioned is because it's the reason why the dollar has weakened relative to the yen. Doesn't necessarily mean a precipitous drop in sales.


RE: lame excuses
By StevoLincolnite on 10/28/2010 11:12:40 AM , Rating: 2
Here we have reached parity with the US dollar (I'm in Australia).
Personally I'm loving it, it's opened up a massive amount of options when it comes to online shopping.

However we didn't go into recession or anything, but the low US dollar has made several game developers close down here which is very sad to see happen as it's a less attractive country to invest in now.


RE: lame excuses
By quiksilvr on 10/28/2010 12:52:45 PM , Rating: 4
Oh, yeah, because gimmicks NEVER become popular.

And the best part about gimmicks? Other companies copy them! Playstation Move, Kinect, even those generic consoles you see at Walgreens are hopping on to the bandwagon.

The problem with the Wii wasn't just the motion controls. Its that very few third party developers wanted to waste their time on it. They would rather just make something for the 360 and port it to the PS3 or vice versa. Porting to the Wii took too much work because you had to cut so much from the HD version of it.

As a result, Nintendo created first party games and peripherals for it. They sold like crazy because the games were actually good. So you get a double whammy: domination in the console market and domination in the gaming market.

But that can only take you so far before people realize that the graphics suck, it's too expensive for what it offers and the online community is virtually non-existent. And now we have the other two console makers with motion controls. So what's the point in getting the Wii? Wii became the niche, secondary console that you play once every few months whenever Nintendo would come out with a game for it.

The young audience that bought it three years ago are slowly growing up and are now asking mom and dad for PS3s and 360s so they can pwn some noobs.

In other words, casual gaming...getting casual.


RE: lame excuses
By sleepeeg3 on 10/28/2010 1:33:45 PM , Rating: 2
Yeah... no. There aren't enough games on the Wii and everyone already has one. That's the real problem. The cost has almost always been less than the other two consoles. They have maxed out selling the actual hardware and have few sources of incoming revenue.

A Wii HD with might kickstart things. They need to do it now while they are sitting on a pile of cash, though, instead of fading away like they did in years past.


RE: lame excuses
By acer905 on 10/28/2010 2:05:33 PM , Rating: 2
quote:
A Wii HD with might kickstart things. They need to do it now while they are sitting on a pile of cash, though, instead of fading away like they did in years past.


November is right around the corner. I can see them throwing a sneak punch and releasing the Wii replacement. If they're smart they've been working on it non stop for 3 years now.


RE: lame excuses
By Akrovah on 10/28/2010 5:35:04 PM , Rating: 2
Doubtful that they'd be able to work on a thing like that and have no one know about it. Also suicidal as without the pre-release hype few people would know about it, and so few people would actually get it.


RE: lame excuses
By acer905 on 10/28/2010 6:09:37 PM , Rating: 2
Maybe that was true in the past, when advertising had to rely on radio/television/magazines. With the level of internet advertising lately, they could get the word out quite rapidly.


RE: lame excuses
By Hiawa23 on 10/28/2010 1:14:31 PM , Rating: 2
If motion control was a gimmick, no one else would be doing it.

Sony & MS are going that way because they need to get the casual market. Is is a gimmick, I don't know. I own all three of this gens consoles & don't like the Wii at all as I don't like motion anything controls. MS & Sony doesn't care if it's a gimmick, they need to improve sales & the only market they truly donot have is the Wii market. That's the only reason they are releasing Kinect & Sony released Move.


RE: lame excuses
By jonmcc33 on 10/28/2010 7:13:16 PM , Rating: 2
Nobody else was doing it. Recently the PS3 added it but barely any games use it. Heck, the PS3 controller itself had motion capability but the games that did use it used it poorly.


RE: lame excuses
By Spivonious on 10/28/2010 10:33:41 AM , Rating: 5
It may be gimmicky, but it's still fun.

The reason Wii sales are slumping is market saturation. It's time for Nintendo to release the Wii 2, or bring out a quieter, smaller version of the Wii.


RE: lame excuses
By Akrovah on 10/28/2010 11:18:26 AM , Rating: 2
I don't really ahve a problem with noise on mine, plus, I don't think it could get much smaller. The thing is barely bigger than the discs it runs.

Wii HD would be awsome though.


RE: lame excuses
By Spivonious on 10/28/2010 11:21:30 AM , Rating: 2
Mine buzzes like an orbital sander. I read that it's because some plastic piece that holds the disc in place has worn down, but I can't find the correct tool to open up the Wii and fix it.


RE: lame excuses
By SilthDraeth on 10/28/2010 11:40:11 AM , Rating: 3
I had to open mine because my kid stuck a ds cart into it. I used the tip of my leatherman needle nose plier, pushed into the screw, and twist pliers, undid the screws. After that, the internal screws were easy. Wii actually comes apart easier than a 360.


RE: lame excuses
By Souka on 10/28/2010 2:34:45 PM , Rating: 2
lots of youtube videos on how to do it... just search


RE: lame excuses
By sleepeeg3 on 10/28/2010 1:25:31 PM , Rating: 2
Spot on. They slashed the MSRP by 40% and sales still declined 14%. Everyone has one. Release the HD Wii...


RE: lame excuses
By Iaiken on 10/28/2010 11:05:15 AM , Rating: 5
quote:
The down economy in the U.S. and other foreign markets was one contributing factor


This is something that my company has had to deal with for the past two years now. We have massive amounts of assets in the US including cash on hand, when we report our finances, we have to perform a mark to market conversion of those assets into Canadian dollars. In the quarters where the CAD made substantial gains against the USD, we experienced mark to market losses because our US assets and cash were worth almost 15-34% less in the Canadian market.

Now these are theoretical losses and are only incurred if we dump our US natural gas and electricity assets and convert the money back to Canadian. However, you must report them in that quarter as if you had so that investors know what you are worth at this point in time.

The other aspect they have to put up with is that the majority of Nintendo's workforce is in Japan (55%), but the majority of their markets (85%) are in the US and EU. This again puts them at the mercy of how good/bad the USD and Euro are doing vs the Yen and both of those are doing quite badly.

Because of the economic downturn and the rise of the Yen, I wouldn't be surprised if Nintendo of America was holding on to almost all of their cash on hand in an attempt to weather the storm until the US dollar rises, or the yen falls, or both. Even then, it will be difficult to judge the stocks of large multinationals until the currency market calms down.

Finally, Nintendo makes money on each and every Wii console and peripheral (unlike MS/Sony), but less money per software license. This causes their bottom line to be harder hit by the 6 million console drop (-20%) in sales they are seeing world wide vs this quarter last year. Despite the above loss game sales falling by only about 6%. Another interesting aspect this year was that while overall sales decreased, the number of "million-seller titles" increased almost 50%. This is indicative of a broader library of games that have found mass appeal.

Is Nintendo doing well? No. Are they doing badly? Again, no.


RE: lame excuses
By sleepeeg3 on 10/28/2010 1:41:01 PM , Rating: 2
So basically you are saying we should stop printing money? Tell Johannes Gutenberg over at the Fed. He wants to print another $2,000,000,000,000...


RE: lame excuses
By Iaiken on 10/28/2010 2:32:35 PM , Rating: 2
I'm not saying that it is a problem in need of solving.

The ongoing economic problems of the US are for the US to solve and for the rest of the world to cope with.

I am just putting Nintendo's fiscal report in perspective.


RE: lame excuses
By AEvangel on 10/29/2010 12:31:00 PM , Rating: 2
Well, don't worry the dollar will continue to fall, allot of Free Market non Government influenced economists are predicting this is the case and the reason behind the mad printing at the Federal Reserve.


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