Nintendo Confirms Major Reductions In Sales and Financial Projections
Posted by Thomas Whitehead
Lowered expectations across the board
Yesterday brought us NPD sales results for the US, which delivered top of the class results for 3DS and Wii U's strongest month to date, but it is now clear that — combined with results worldwide — those numbers simply weren't high enough. Nintendo has today issued adjustments to its financial and sales projections for the fiscal year and, undoubtedly, they make worrying reading.
Until now Nintendo had maintained its headline-making target of a 100 billion Yen operating profit — that's the figure that ultimately determines the company's performance in its core business — for the financial year, which is 1st April 2013 to 31st March 2014. Yet Nintendo has now revised that target to an expected loss of 35 billion Yen, which converts to roughly £205 million / €246 million / $335 million. Net income, the overall number that incorporates tax payments and, to Nintendo's benefit in previous quarters, currency fluctuations, is also set for a loss of 25 billion Yen — that's roughly £146 million / €176 million / $240 million. There'll be an "ordinary income" profit due to a weak Yen, but the company will make that overall loss partly because it will "need to reverse deferred tax assets" in the US, as a result of the anticipated financial recovery not taking place.
So those are the financial projections, but what about hardware? There are notable drops in the expected sales for the year.
Previous software sales projection — 38 million units
Updated software sales projection — 19 million units
Previous hardware sales projection — 9 million units
Current hardware sales projection — 2.8 million units
Previous software sales projection — 80 million units
Updated software sales projection — 66 million units
Previous hardware sales projection — 18 million units
Current hardware sales projection — 13.5 million units
Previous software sales projection — 20 million units
Updated software sales projection — 26 million units
Previous hardware sales projection — 2 million units
Current hardware sales projection — 1.2 million units
Previous software sales projection — 10 million units
Updated software sales projection — 10 million units
No hardware sales projections for DS
Overall, this'll make tough reading for Nintendo management, shareholders and, of course, fans. It shows that the 3DS, despite its highs in 2013, isn't reaching the targets that Nintendo set; perhaps a reflection of strong results in the current market having a different reality to those of the DS and Wii days. The Wii U numbers are troubling, in particularly the hardware figure. We've already seen sales dip last week in Japan after improvements in December, and it's clear that momentum before and after the Holidays around the world is anticipated to be particularly low. A total of 2.8 million units worldwide for the whole year will certainly put the system under pressure.
Satoru Iwata has issued a statement regarding these results, which we'll cover in more detail in a separate article. These are Nintendo's revised projections, yet as they're so close to the end of month Q3 financial reports they're likely to be relatively accurate, albeit Q4 is still to come. Let us know your thoughts on this in the comments below.