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Nintendo Co. Ltd. today revised downward their earnings estimates
for the first half and full fiscal year. Largely because of the
continued strength of the Japanese yen, Nintendo lowered their
earnings expectations for the six-month period ended September to
¥7b ($57m) from May forecasts of ¥30b ($243m), or 77%. The strong
yen was responsible for a ¥4.5b loss in sales and ¥29b loss in the
value of foreign assets. A strong yen hurts the profits of Japanese
exporters such as Nintendo by reducing the value of sales when
repatriated to the Japanese currency.
While pretax profits excluding extraordinary items fell sharply,
Nintendo's expectations of net profit for the period remained
unchanged as the company's sale of its 49% stake in Rare Ltd. for
$183m buoyed net income. Full year estimates of group recurring
profit through March of 2003 were lowered as well from ¥150b
($1.2b) to ¥110b ($892m). Estimates of group net profit were
lowered from ¥90b ($731m) to ¥80b ($650m). Nintendo's currency
exchange forecasts for the second half of this year were revised to 123
yen/dollar and 121 yen/euro. This from earlier estimates of 130
yen/dollar and 115 yen/euro.
Nintendo's expectations on the fundamentals were also lowered.
Nintendo reduced their sales expectation of GameCube by 17% and Game
Boy Advance by 23% for the fiscal year ending March 2003. The
company now set its GameCube shipment target to 10 million systems
this fiscal year from an earlier target of 12 million. Game Boy
Advance shipments will also be lowered to 15 million from 19
million. The move was largely a result of very soft hardware sales
in Japan and Germany.
On a positive note, Nintendo increased GameCube software shipment
expectations to 55 million from 36 million. Satoru Iwata, President
of Nintendo comments, "We plan to release several Nintendo-made
big games later this year along with other software makers' strong
titles. We believe GameCube's share of the U.S. market will rise to
one-third from the current 20 percent after the Christmas shopping
season." Iwata further stated that the company had no plans to
lower GameCube's MSRP any time this year.
Nevertheless, Nintendo shares fell sharply this week as concerns
about future growth set in and some industry analysts downgraded the
stock. Nintendo shares fell to the lowest prices since 1999, finding
an intra-day bottom of 10,940 on Thursday before fighting back to
close at 12,050 on Friday.
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October
04, 2002 |
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Rick - Editor in
Chief, GameCubicle |
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