When Nintendo revealed its financial update for Q3 at the end of January, it projected a net profit of 14 billion Yen (just over $150 million) for the financial year; it must be said that this projected profit was in spite of an operating loss, which reflects the core business of producing and selling consoles and games. That said, it was a victory for the accountants and a suggestion that, even with dropping hardware and software sales estimates, the company would still turn a modest profit to bolster its impressive reserves of cash.
Ahead of tomorrow's yearly results from Nintendo, Bloomberg has been checking its own data and talking with a number of analysts and is suggesting that Nintendo will actually record a loss tomorrow of 18.7 billion Yen (just under $190 million); this is based on 15 compiled estimates. Nintendo had already projected a 20 billion Yen operating loss, but if the net result falls into the red — despite favourable market conditions in Japan — then it'll undoubtedly be a blow.
These estimates also suggest that Nintendo will announce 3.5 million worldwide Wii U sales, missing the target of four million set in January — which itself was a revision down from an initial estimate of 5.5 million before the system's launch. It's being estimated that the coming financial year will bring improvement, but Satoru Iwata's commitment of an operating profit of 100 billion Yen ($1 billion) may fall short, with analysts predicting a potential operating income of 70 billion Yen instead.
We'll know for certain tomorrow, but these aren't particularly positive noises from investors, and Bloomberg asked 20 analysts for recommendations on Nintendo stock — four were positive and advocated buying, 13 suggesting holding shares and three recommended selling. On the flip-side, that balance of opinion suggests that there's enough doubt and longer term confidence still around to give some cheer.
Perhaps these estimates will be wrong, but if correct there'll be more pressure on Satoru Iwata and his board members in the shareholder briefings that follow the financial announcements. We'll be reporting on what transpires, which will include sales figures on Nintendo's hardware and software, as details emerge.