Nintendo Profits Plunge
Laptop Battery Nintendo Company Limited today announced that its first-half operating profits have fell 51 percent due to sluggish sales of the Nintendo GameCube console. While Nintendo did not adjust its forecast, it is expected that for the full year, Nintendo will see a decline in revenues as sales of GameCube consoles and games fall, and the company sees a decline in per unit profits on the Nintendo DS due to a price cut. Further, in the second half of the fiscal year, Nintendo will have to deal with Microsoft's Xbox 360, which launched Tuesday in short-supply.
For the first half of its fiscal year (April to September), Nintendo's profits were 19.6 billion yen (US$163.4 million), compared to 40 billion yen (US$335.4 million) a year earlier. Nintendo's sales were down 6.2% compared to last year, and the company's net profits fell as well. While Nintendo's shares rose 13.2% in the first half of its fiscal year, the company underperformed the Nikkei average of a 16.3% rise.
Nintendo may have more struggles ahead as the company will likely be last to roll out its next-generation console, Revolution, with Sony expected to release the PlayStation 3 in the spring of 2006. Nintendo has admitted that it believes the GameCube is nearing the end of its life and that Nintendo said last month that it margins have been hurt by development costs for Revolution.
reported this morning that Nintendos sales for last quarter plunged compared to past years. Nintendo said it has suffered a 75.8 percent decline in sales profit this quarter. The company cited an increase in development cost over the last year for the decrease in profits. This quarter, the companys overall operating profits fell from 17.47 billion yen to 3.75 billion yen. Its net profit also plummeted from 22.64 billion yen to 14.12 billion yen.
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