Nintendo slashes earnings forecast on delay of 3DS game console
Japanese video game giant Nintendo Co. slashed its earnings forecast for the fiscal year ending in March as it announced that its highly anticipated 3 DS console would miss the crucial holiday shopping season.
The disclosure that Nintendo, which has dominated the video game business in recent years, will miss its revenue and net income targets is the latest bad news for an industry that has seen sales slump amid the economic slowdown.
Nintendo in particular has been affected as sales of its Wii console and games have slowed compared with the competing Xbox 360 from Microsoft and PlayStation 3 from Sony.
The 3DS, a new version of the company’s portable game console that displays 3-D images without glasses, is Nintendo’s next major initiative expected to boost sales. By missing the holiday shopping season, when game hardware traditionally launches, Nintendo probably will depress its sales prospects in the short term.
The 3DS will launch in Japan in February. Nintendo didn’t announce a release date for the U.S. or Europe, but it had previously said it would hit all markets by the end of March.
“The release in Q4 has negatively impacted its financial outlook, as we had expected a Q3 release in Japan,†Wedbush Morgan analyst Michael Pachter said in a research note.
Nintendo dropped its sales forecast for the fiscal year ending March 31 by 21% to $13.15 billion. Net income is now projected to be 55% lower than previously expected at about $1.1 billion.
In addition to the delayed release date for the 3DS, Nintendo blamed the rising value of the yen and current sales trends. The company reduced sales forecasts for its Wii and DS hardware and games for the consoles.
Nintendo expects to sell 4 million 3DS devices and 15 million 3DS games by the end of March.
Analyst Colin Sebastian at Lazard Capital said 3-D effects could help Nintendo’s new device to stand out from the growing number of other devices that can play high-quality games.
“As smart phones and connected tablets gain share in the casual and hand-held game market, the 3DS will offer consumers a unique and differentiated experience combined with Nintendo’s historically strong first-party software lineup,†he wrote in a note.
The 3DS will cost about $300 in Japan. The original, non-3-D DS cost $150 when it was launched in 2004.
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