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Nintendo six-month profit falls 52%, full-year estimates cut

Weakening Wii sells only 5.75 million units during six months, down from 10.1 million; just $2.5 billion in annual profit now expected; new large-screen DSi hits Japan November 21, US & EU Q1 2010.


Anyone doubting that the Wii's momentum is ebbing was rebuked today by Nintendo's own earnings report. For the six months ended September 30, 2009, the company saw its profits plummet by 52 percent, falling from ¥144.8 billion ($1.6 billion) from April to September 2008 to ¥69.5 billion ($766 million) from April to September 2009. On a year-on-year comparison, overall revenues fell from ¥836.9 billion ($9.22 billion) to ¥548.1 billion ($6.0 billion), a decline of 34.5 percent.

Shrinking earnings are likely causing some tension among Nintendo's staff.
Shrinking earnings are likely causing some tension among Nintendo's staff.

As has been indicated by both American and Japanese sales reports, the main reason for Nintendo's flagging fortunes is the Wii's slowing sales. Worldwide, the console sold just 5.75 million units during the six-month period, down from 10.1 million during the same period in 2008. Lifetime sales of the Wii now total 56.14 million units.

Wii software was less impacted, falling from 81.4 million to 76.2 million during the six-month window. This trend may change, though, since the Wii's price dropped to $200 in the US at the end of September.

In a brief statement, the company admitted a lack of blockbuster games was partly to blame for the Wii's flagging fortunes. "With respect to the Wii, software titles which briskly drive hardware sales were not launched in the first half of the [fiscal] year [ending March 2010]," read the statement. "In addition, the negative impact of the Wii hardware price reduction and appreciation of the yen were also absorbed."

The DS platform fared better, with worldwide April-September hardware sales dipping slightly from 13.7 million units to 11.7 million units. The figure included some 7.2 million units of the DSi handheld, which has now sold 10.1 million units since launching last November in Japan and in April in the US and EU. Life-to-date DS hardware sales now total 113.48 million units, but DS software sales fell from 85 million units to 71.1 million units during the last six months.

Despite today's announcement of the new, larger-screen DSi XL, Nintendo believes that decreased Wii and DS sales will impact its earnings more than previously expected. The company revised its profit estimate for the year ending March 31, 2010, to ¥230 billion ($2.5 billion), down from the ¥300 billion ($3.3 billion) it had previously forecast. The new figure marks a decrease from the nearly 280 billion yen ($3.1 billion) profit the company posted for the financial year ending March 31, 2009.

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