Nintendo's annual profits sliced in half

TOKYO--Today, Nintendo announced its earnings for the year 2004 ending March 31, 2004--and the news was not good. Nintendo's net profit dropped by a massive 50.7 percent, falling to 33.2 billion yen ($297 million) for its financial year 2004.

However, Nintendo's downfall was not due to a lack of business. The company's sales were up 2.1 percent to 514.8 billion yen ($4.61 billion), and its operating income was also up by 7.6 percent to 107.7 billion yen ($966 million). Rather, Nintendo's decline is directly attributed to its one-time foreign exchange loss of 67.8 billion yen ($608 million), which emerged from revaluation of its foreign currency assets, courtesy of the rising yen and the falling dollar. The company expects to get back on track in the upcoming year, forecasting sales of 530 billion yen ($4.7 billion) and a net profit of 70 billion yen ($620 million) for FY2005.

Nintendo's hardware and software sales were largely steady over the last financial year. The portable sector remained Nintendo’s main source of income, with the Game Boy Advance and Game Boy Advance SP selling a total of 17.6 million units in FY2004--about 2 million units more than sales from the previous year. Sales of the GBA SP and GBA have swapped ranks, with the GBA SP now selling 15 million units and the GBA selling just 2.6 million units. Last financial year, the GBA SP sold only 2.1 million units, while the GBA sold 13.5 million units.

Software sales for the GBA and GBA SP were also up by a solid 26 percent to 74.8 million units. Super Mario Advance 4 and Donkey Kong Country each sold more than a million copies worldwide, while Pokemon Ruby & Sapphire, which sold 6 million copies in FY 2003, sold an additional 6 million copies worldwide during FY2004. In Japan, Pokemon Fire Red & Leaf Green sold more than 1 million copies combined, as did the Famicom Mini series. For FY2004, Nintendo earned 185.2 billion yen ($1.66 billion) in hardware sales and 133 billion yen ($1.19 billion) from software sales in its portable game sector.

In the console sector, GameCube software sales were up by two percent to 47 million copies worldwide, thanks to a larger number of games released than the previous year. However, console sales for the GameCube took a small dip from 5.7 million units to 5 million units. Nintendo explains that the company faced sluggish sales during the first half of the year, but the pace began to pick up during the latter half after a worldwide price drop on the GameCube console and the launch of anticipated titles such as Mario Kart: Double Dash!! and Mario Party 5. Nintendo's sales in its console sector are comparably lower than its portable game sector. In its console game sector, Nintendo made 54.4 billion yen ($488 million) in hardware sales and 86.3 billion yen ($774 million) from software sales.

Nintendo's operations in Japan rose slightly, partly due to upturns in the economy, and the company marked 361.7 billion yen ($3.24 billion) in sales and 92.9 billion yen ($833 million) in operating profit. Steady consumer spending helped Nintendo's sales in America, where the company sold 252 billion yen ($2.26 billion) worth of product and incurred 13.1 billion yen ($117 million) in operating income. Sales in Europe were 120.1 billion yen ($1.77 billion), and operating income was 2.9 billion yen ($26 million).

Over the coming fiscal year, Nintendo hopes to promote and develop titles for its upcoming portable game device, the DS. The company aims to ship 3.5 million hardware units of the DS and 15 million copies of DS games during the fiscal year. On the other hand, Nintendo forecasts that GameCube sales are expected to fall to 4.5 million units, and game software is expected to go down to 45 million copies. GBA SP sales are expected to fall to 14 million units, with its game titles dropping to 70 million copies. Nintendo’s estimates do not include estimates for the non-SP GBA, since it will only be manufactured by request in the future. Nintendo also announced plans to unveil a next-generation console to succeed the GameCube during E3 2005.