In February, Square Enix issued a full-year financial forecast, which saw its projected net income drop 90 percent to ¥1 billion ($12.35 million) on sales of ¥130 billion ($1.60 billion). Now, the day before it reveals its full-year earnings, the company has pulled back the curtain on its finances by issuing revised annual guidance--and the picture it paints isn't pretty.
Square Enix now says that for the 12 months ending March 31, 2011, it expects to suffer "extraordinary losses" of ¥12 billion ($148.33 million) on revenue of ¥125 billion ($1.53 billion). The figures stand in stark comparison to the ¥9.5 billion ($117.44 million) in profit the company made on ¥192.25 billion ($2.37 billion) in revenue the year prior.
In a short statement, the company explained the drastic downward revision. Much of the company's losses can be chalked up to a reassessment of unspecified previous acquisitions now worth approximately ¥8.8 billion ($108.78 million) less due to a "rapidly changing operating environment."
Also, because of the introduction of a "tightened selection standard regarding title lineup," the company expects around ¥4.5 billion ($55.61 million) in costs related to "project development cancellation." In mid-March, the company canned Gun Loco, a violent third-person shooter for the Xbox 360.
Like many other companies in Japan, Square Enix also saw its bottom line affected by the tragic Tohoku earthquake and tsunami in March. As a result of the twin natural disasters, the company recorded a loss of ¥0.6 billion ($7.4 million) due to damage to and closures of several of its amusement facilities.