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This comes after revisions to its sales and profit through March 2014

Nintendo's new year hasn't been too forgiving, as the company was forced to revise its sales and profit expectations through March. With hard times ahead, the company is realizing that it needs to hop on the mobile bandwagon if it wants to stay alive.
 
According to Bloomberg, Nintendo is considering a new business structure that includes launching games on smart devices such as tablets and smartphones.
 
“We are thinking about a new business structure,” said Satoru Iwata, Nintendo CEO. “Given the expansion of smart devices, we are naturally studying how smart devices can be used to grow the game-player business. It’s not as simple as enabling Mario to move on a smartphone.”
 
This could be a good move for Nintendo, considering hardcore console gamers tend to stick with Sony's PlayStation or Microsoft's Xbox consoles while more casual gamers have flocked to mobile devices -- not to mention that almost everyone now carries at least a smartphone on their person. 
 
Nintendo has also been pretty stubborn about offering its characters to online mobile games, which the company could profit off of. 
 
But times are getting tight for Nintendo, and it's realizing that if it doesn't make some big changes, it'll sink.
 
Earlier this month, a statement from Nintendo announced that its anticipated Wii U units sold from April 2013 to March 2014 was changed from a previous 9 million to just 2.8 million. This represents a staggering 69 percent drop. 
 
Wii U software doesn't look any better, with sales expectations falling from a previously reported 38 million to just 19 million. 
 
The company also had to revise 3DS sales expectations, dropping from 18 million to just 13.5 million units sold. As for the original Wiis, Nintendo is cutting their sales expectations from a previous 2 million to 1.2 million. 
 
With so many sales revisions, Nintendo is also decreasing its financial forecast, which includes a loss of 25 billion yen ($240 million USD) -- down from a previously reported 55 billion yen profit. 
 
Iwata said the company was unable to take advantage of the weaker yen. Nintendo decreased its planned dividend for the fiscal year from 260 yen to 100 yen. Nintendo revised its foreign-exchange predictions from 90 yen to the dollar to 100 yen, and from 120 yen per euro to 140 yen.

Source: Bloomberg



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RE: It will be over
By Motoman on 1/21/2014 3:48:46 PM , Rating: 2
quote:
"If we start with the overall traditional [Entertainment and Devices Division] business that actually loses money before corporate allocations and back out the nearly $2 billion 95 percent gross margin Android phone royalties, we conclude that Xbox platform plus Windows phone and Skype lose about $2.5 billion per year, and we estimate that the Xbox platform may account for roughly $2 billion of this," Sherlund said. "This is contrary to conventional wisdom, we think investors do not realize how extensive the operating costs are for this business and it is concealed by the hugely profitable Android royalties."


MS reports all their "entertainment and devices" as a single number...which is probably a deft move on their part, as this Nomura analyst has looked behind the curtain and figures that after you take out the wildly profitable Android licensing revenue (which is essentially pure profit), the rest of the stack (XBox, Skype, and Windows Phone) are losing about $2.5B.

The analyst, Rick Sherlund, is a former Goldman-Sachs player and is the head of US Technology Equity Research for Nomura Holdings now. Which is to say, not just some crackpot.

So, while I don't have access to his complete report to see exactly how he came to his decisions, it's rather obvious that the guy has the credentials to back up his assertion. Which is that, as a whole, the XBox platform as a whole is losing about $2B a year for Microsoft.


"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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