Nintendo profits cool in latest quarterly earnings report

The dynamite DS can't offset a dearth of games and plummeting GameCube and GBA sales; game giant remains in the black.

When analysts (accurately) predicted Sony would see serious losses, many Nintendo loyalists felt some schadenfreude at their archrival's suffering. Today, though, it was the house of Mario that saw its financial foundations shaken by lackluster earnings numbers.

According to Reuters' Japanese service, Nintendo reported a 78.5 percent decline in operating profit for the quarter ending June 30, 2005. Its 13.72 billion yen ($123 million) in operating income was off 3.75 billion yen ($33.4 million) from the same period in 2004. While disappointing, the figures did slow the precipitous decline Nintendo reported in the January-March quarter, when its profit dropped 8.5 billion yen ($75.8 million). Overall, quarterly sales were off 14 percent, weighing in at 70.7 billion yen ($630.6 million).

The slump can be attributed to two main factors. First was a dearth of games released during the quarter. While more than a dozen games shipped for the Game Boy Advance in the US, the North American continent saw fewer than 10 major GameCube releases, most of which were third-party ones available on multiple platforms.

Indeed, the second major reason cited by Reuters for Nintendo's thinning profits involved sagging sales of the Game Boy Advance SP and the GameCube. The venerable portable only shipped 980,000 units during the quarter, down from 2.3 million the previous year. Sales of the console dropped an estimated 60 percent during the quarter, compared to the same period during 2004.

The GameCube's slide was similar to--but greater than--the reduced demand for both Sony's PlayStation 2 and Microsoft's Xbox. Analysts blame the lessened interest on current-gen consoles on the looming launch of the Xbox 360 later this year and the PlayStation 3 next spring. They have also said that research and development costs for both next-gen hardware and software are also cutting into all three console makers' bottom lines.

Though the news was not good for Nintendo, it was also not entirely bad. The company reported brisk sales of the DS, shipping more than 1.38 million games for the handheld in the quarter. The company told the BBC that it plans on shipping more than 12.4 million DS units by March 2006.

NPD numbers released today showed that Pokemon Emerald for the GBA is the second best-selling game of 2005 in the US, despite only being released in April. Resident Evil (GC) was eighth on the list, and the Legend of Zelda: The Minish Cap (GBA) was seventh. Both games shipped in January.

It also can't be understated that Nintendo saw a profit in its last quarter. By comparison, Sony Computer Entertainment today reported a quarterly loss of 5.9 billion yen ($52.6 million). Last week, Microsoft's Home and Entertainment division, which makes the Xbox, said it lost $179 million during its last quarter.

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