News Article

Analysts Predict Financial Year Losses to be Reported by Nintendo

Posted by Thomas Whitehead

We'll know soon enough

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.

[via bloomberg.com]

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User Comments (32)

Einherjar

#2

Einherjar said:

Like i said many many times before: Bring the games and the consumers will come. Without anything to play there is no reason to buy an expansive new console.
I love Nintendos support for the 3DS, dont get me wrong. But the painfully slow start of the WiiU is no mystery or myth, its plainly obvious. So why arent they shifting their attention (temporarily) to the WiiU to get it startet properly. The 3DS is strong enough to stand on its own two feet by now, it surely will survive half a year without Nintendos 100% attention. But if the WiiU doesnt get any, it could be over before it started. Nintendo, get us hyped about the games already in the pipeline: Bayonetta 2, Wonderful 101 and whatnot. We know that a new Zelda is coming out, we know about Mario & Luigi 4 but we havent heard anything from these games in ages. Every "Nintendo Direct" in the last couple of months has been centered around the 3DS. You have a new home console...have you already forgotten ? Pikmin 3 is awesome, we know it, but it alone is not a saving grace. You have to keep your customers on edge. We shouldnt need to dig up infos on new WiiU titles ourselfes, YOU should feed your customers with infos, teasers and whatnot to the point, that we cannot resist to buy your games.
And also...get that spring update online :P

Spoony_Tech

#3

Spoony_Tech said:

The 3ds is the only thing holding it up right now. Remember the prediction of about 5 games per Wii U owner?! I highly doubt they are anywhere near 2.5 then anlone that mark. I do hope they turn it around by CHRISTmas!!

3DSLUIGI

#4

3DSLUIGI said:

Heh, I hate to say this but it looks like Nintendo may be in the same situation as they were in back in 2011 when they had to do a price drop for the 3DS because of it's poor sales. Even though I still don't own a Wii U yet, if Nintendo is to report a loss, then probably a Wii U price drop MAY just be in their window after all, despite those times Iwata said there wouldn't be a price drop.

NintyMan

#5

NintyMan said:

I have no doubt that there will be calls for Iwata to resign if such a loss happens, but as I keep stressing, there needs to be patience in order for the games to come for the Wii U and save it, as the games saved the 3DS.

rjejr

#7

rjejr said:

Putting a "hold" on Nintendo stock seems like the right move 2 months before E3 when we'll find out if the WiiU is getting the games everyone wants this year, plus also a lot more info about the PS4 and the new Microsoft console. After that is the time to make decisions.

Nintendo is in a bit of a holding pattern itself right now - there's no point in lowering the WiiU price right now as it still isn't going to sell w/o any games. They also don't know the new console prices, $350 may seem cheap this holiday when the games are out. They probably have news about new games we'ld all love to hear, but they can't announce it b/c then everybody would whine about no new-er news at E3, so they have to hold their breath and bite their tongue until then. Though they should still get W101 and Bayonetta 2 release dates out there.

vinniegambini

#8

vinniegambini said:

^ This piece is wrong sadly. Bloomberg announced that Nintendo is to meet its revised projections. As per the following (http://www.nintendo.co.jp/ir/pdf/2013/130130_2e.pdf), Nintendo announced that it would post an operating loss of 20 Billion Yen but a net profit nonetheless of 14 Billion Yen. Hence, Bloomberg is just re-affirming the above. Read the third last sentence of the link under Sliding Yen: ''That may enable the company to post net income of 14 billion yen tomorrow, the company said in January. ''

real_gamer

#9

real_gamer said:

Thank you NintendoLife for breakin it down because I for sure would have been a bit confused on some things.

Haxonberik

#10

Haxonberik said:

To be fair, if they get a loss this year, they briught it onto themselves. They moved ALL their launch window games out of the initial March limit. Just now with MH3 and NFS:MW we are starting to get Wii U games, but they're still old ones.

Of course I still trust Nintendo will get back on foot by 2014 but this has been a very rocky generation transition. If I had known Pikmin 3 wouldn't have released by March, I would've held back from buying the Wii U by launch at a counter-deal (I had to get a Wii Controller and preorder a game, which quite sadly was Rayman) and get some deal on it.

HeatBombastic

#11

HeatBombastic said:

@3DSLUIGI Didn't the price drop come when Mario 3D Land was released? They'd probably have to get a big-hitter on the Wii U before that happens. Maybe Mario Kart?

Nintenjoe64

#12

Nintenjoe64 said:

I don't really take the analysts seriously now because their estimates just seem to be regurgitated by every site with every analyst using the first set of figures as their own. Would not be surprised if Nintendo made a loss but would also not be surprised if they did exactly what they said when they slashed forecasts.

I'd be sad if Iwata lost his job over their performance but the plus side would be that the next console might be ludicrously over-powered which would be cool and would negate 90% of the haters' reasons for hating Nintendo.

HeatBombastic

#13

HeatBombastic said:

@Haxonberik No one ever said they haven't brought it onto themselves. I never heard Nintendo say, "It's the fans fault for not being dedicated enough". What exactly are you trying "to be fair" with?

Haxonberik

#15

Haxonberik said:

@HeatBombastic More than anything because at many times I think new kids with an awful taste in gaming playing CoD or iGames only have caused Nintendo to be unable to win more crowd and the videogames market to suffer but right now I think to myself the slow start of the Wii U is more on Nintendo's hands.

DualWielding

#17

DualWielding said:

Nintendo won't be making any profit out of the Wii until at least Christmas 2014 so they should concentrate on the 3DS as that will be the main income source for this year and the next

luminalace

#18

luminalace said:

I'd imagine it would be hard for Nintendo too meet earlier predictions when many of their games were delayed, however I am expecting Nintendo to do o.k.

real_gamer

#20

real_gamer said:

I like Satoru Iwata as president of Nintendo. With him as president he brought the DS series, the Wii series, Nintendo Direct videos, and the Iwata ask interviews.

Dpullam

#21

Dpullam said:

I'm sure Nintendo will pull through fine in the end. They just need to start marketing the Wii U correctly. Once the games start flowing it will see the success it needs though I don't believe it will be as successful as the 3DS is right now. I could be wrong though.

Nintenjoe64

#22

Nintenjoe64 said:

@HeatBombastic yeah but people are gonna think that anyway despite the fact the Wii had games like Manhunt2 or Godfather where you could physically act out grabbing, strangling and punching innocent NPCs and throw them into moving traffic. I think it's more mature when a game is pure fun and suitable for everyone than when a game puts titties, blood and swearing in to make sure 12 year olds want to buy it.
Anyway, shareholders might be angry that they made two straight losses but they owe the $12Bn in the bank to Iwata so it would be harsh not to let him see out his plans for that money.

Peach64

#23

Peach64 said:

I don't think they're ignoring the Wii U's problems. A lot of what we're seeing come out now on the 3DS was probably started when that console was having trouble.

I think Nintendo screwed up the launch by not having anywhere near enough games ready. I think what happened with the Wii may have fooled them into thinking they didn't need real games, that the brand would be enough. Either way, I believe by mid-january they fully realised how bad the situation was, and they probably started getting to work on a LOT of projects around then. Then problem is these games take years to make, so now, only a few months later, they don't have anything to show. I reckon by the end of 2014 we're going to see a lot of great games coming out, that probably got put into motion by the abysmal sales seen in January, February and March this year.

AltDotNerd

#24

AltDotNerd said:

Three facts:
1. Nintendo always comes out on top.
2. Nintendo rules.
3. Analysts can go jump off a cliff.

JSuede

#26

JSuede said:

Considering the loss will undoubtedly be less than last year and it might be less than their estimate....it really isn't THAT bad. Sure, losing $188 million is never great, but it shows they are cutting their losses, which is more important to investors than "OH NO THEY LOST MONEY AGAIN IN A TERRIBLE ECONOMY RIGHT AFTER LAUNCHING A SYSTEM THAT THEY SELL FOR A LOSS". It shows that the future could keep moving up, investors are constantly speculating and improvement is improvement.

No doubt Iwata will discuss the 3DS at the investor meeting and how its increasing profit margins will help take care of those losses by the end of the year, in conjunction with the software. They will certainly be asking about the Wii U and what can be done, which is where he will talk about how they plan to release games at a far steadier pace from now until the end of the year. They might not be releasing that many first party games, but Monster Hunter/NFS/Lego City increased sales in the UK 125% and tripled them in France. It is quite possible he will mention Wii Fit (maybe ready for a summer release to get people in shape for the beach or whatever), Game & Wario coming out, MAYBE touch on that W101 release date leak, the Virtual Console, MiiParty or whatever that thing was and maybe even some third party partnerships, if not their games.

Iwata may seem like a super friendly fun guy in the Directs, but that is because he is talking to the customers of the product. Behind closed doors, he is still a businessman, one who definitely knows how to sell his product. I mean, he even said that he is "committed" to posting a 100 billion yen operating profit next fiscal year (exchange rates can affect this particular number though).....which is being inferred/implied that he might step down if it doesn't happen. He knows they have big guns, he just needs to tease them to investors a bit more because that is one hell of a promise.

BlatantlyHeroic

#28

BlatantlyHeroic said:

It would all be different if they had decided to advertise the Wii U better. They don't specify that it's a new console very well, nor do they advertise the Wii U often.

XFsWorld

#30

XFsWorld said:

Only 3.5 million :O, I thought they were at least over 4 million.

Perhaps, the price cut should happen ONLY after the big titles release: Bayonetta 2, Pikmin 3, Zelda Wind Waker, 3D Mario, Mario Kart U, Smash Bros, Wonderful 101, Wii Fit U, and Yarn Yoshi. So people can have the games that tempt them to buy the REDUCED price Wii U.

Zombie_Barioth

#31

Zombie_Barioth said:

Nintendo got themselves into a real pickle this time around. They all but burnt their bridge with the core market so they can't rely on the strenght of their brand in name alone like they used to yet they also resolved to gear the Wii U towards the core market so they can't rely on their "casual" games like the Wii series to drive sales.

Unfortunately theres no quick fix since no matter what they have to wait it out until more games are finished, and even the its an uphill battle even with a price drop and games since they're also fighting the economy, their image, and the competition while also trying to balance being family friendly with appealing towards the core market.

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