N’s profit fall short due to lagging GC sales

[Geeforcer]

Nintendo diehards on many sites claim that GC is going great and everything is going according to plan… Nintendo seems to disagree.

http://quote.bloomberg.com/apps/news?pid=10000080&sid=aE00U63dING0&refer=asia

Kyoto, Japan, April 7 (Bloomberg) -- Nintendo Co. said full- year profit fell by about 38 percent and sales of its GameCube console lagged forecasts by about half, handing Microsoft Corp. the title of the world's No. 2 maker of video-game machines.

Kyoto-based Nintendo, until this year second only to Sony Corp. in console sales, said it sold about 5.6 million GameCubes in the fiscal year ended March 31, 44 percent short of its 10 million unit goal. Microsoft expects to sell 9 million of its Xbox game machines in the fiscal year ending June 30.

The weaker-than-expected GameCube sales at Nintendo, whose shares have fallen 52 percent the past year, may increase pressure on the company to follow in the path of rival Sega Corp., which scrapped its Dreamcast game console when sales flopped. The poor sales may also force software designers to abandon the machine in favor of Sony's PlayStation 2 or Microsoft's Xbox.

``Lower-than-expected GameCube sales mean Nintendo has failed to grab users in the higher age bracket,'' said Soichiro Fukuda, an analyst with Nikko Citigroup Ltd. ``The company has to solidify its hold on younger players by developing games that link their Game Boy Advance hand-held player with the GameCube.''

Nintendo's shares fell after the earnings were reported earlier in the day by the Nikkei English news service. The shares fell 120 yen, or 1.2 percent, to 9,520 yen on the Osaka Stock Exchange, after earlier gaining as much as 3.5 percent.

Earnings

Nintendo's release of figures on GameCube sales coincided with the company's announcement that group net income fell to about 66 billion yen ($547 million) in the 12 months ended March 31, down from 106.4 billion yen in the year-ago period. Nintendo had expected net income of 80 billion yen.

Full-year sales fell by about a 10th to 500 billion yen, lagging Nintendo's forecast by about 17 percent, the company said in a statement to the Osaka Stock Exchange.

``GameCube sales were bad worldwide,'' Chief Financial Officer Yoshihiro Mori told reporters in Osaka.

Nintendo blamed the shortfall on disappointing GameCube software sales and the popularity of rival titles such as the ``Grand Theft Auto'' series for Sony's PlayStation 2, which siphoned sales away from the GameCube.

Software sales for the GameCube totaled about 44.5 million copies, falling short of Nintendo's 55 million target.

Sales of Nintendo's Game Boy Advance hand-held player exceeded its expectations. Nintendo said it sold 15.7 million of the players last fiscal year, surpassing its 15 million forecast.

Game Boy Advance software sales also did better than expected, selling 58 million units or 16 percent better than forecast.

 

[Ozymandis]

Who to trust, Nintendo fans or Nintendo themselves?

All kidding aside, this is bad news, but not totally unexpected. I can't believe their CFO actually said "GameCube sales were bad worldwide" though

 

[Tagrineth]

...but they're still making a profit.

 

[Ozymandis]

...but they're still making a profit.

Without counting the GameBoy Advance, how much though?

I wonder if one day Nintendo might decide that they'd getting a better return by focusing solely on handhelds. With things seemingly going downhill on the home console front, this seems to me to be a real possibility

 

[Sonic]

Still making a profit, but lower than expected. Something that really isn't liked by stockholders. They're still making a profit, which is a plus and as long as they make a profit from the GCN then the stockholders will be happy with it, but if the profits aren't comparable to that of N64 then they may be pressured to go the SEGA route. I doubt they will do that as long as they have adie hard following that still buys games by the millions. It's bad news but it's not the end of the world. Their 2003 lineup should sell many more games than their 2002 lineup and if they reduce the cost of the GCN then that would fuel sales by an extraordinary amount.

 

[Steve Dave Part Deux]

A more financially lucrative option than going the "Sega" route would be to burn all their offices and collect the insurance.

 

[wazoo]

It is difficult to compare with last year, which was their best year in history with respect to profit. It seems they got as much money as 3-4 years ago.

It is not like they are not making a big profit, how many companies do make more profit in THIS business than Nintendo ?? Sony (which was in the black last year) and EA which is over Nintendo for the first time (and should stay the same unless Nintendo produce another Pokemon-like success).

The GC is clearly underperforming, with 5.6M this year, they are around 9-10M overall (I am right ?).

Seems ps3 will have no competition if both GC and Xbox have difficulties to pass the 10M mark

 

[London Geezer]

A more financially lucrative option than going the "Sega" route would be to burn all their offices and collect the insurance.

er....... :? ........ ....... ....... ........

 

[Geeforcer]

...but they're still making a profit.

Very true, but the profits have come below expectations. Furthermore, when you have planned on selling 10 million units (Wasn't the original estimate 12 million, before it was lowered to 10 a while ago?) and only sell 5.6 Million, clearly the game plan needs work.

BTW, there is PM for you.

 

[London Geezer]

...but they're still making a profit.

Very true, but the profits have come below expectations. Furthermore, when you have planned on selling 10 million units (Wasn't the original estimate 12 million, before it was lowered to 10 a while ago?) and only sell 5.6 Million, clearly the game plan needs work.

BTW, there is PM for you.

hey what u PMing Tag for??

j/k

 

[Tahir2]

I think he meant PMS cos its TOTM... hehe.. OK new mods dont ban me already


Thats it your baned j/p

 

[cybamerc]

Ozymandis:

> I wonder if one day Nintendo might decide that they'd getting a better
> return by focusing solely on handhelds.

I wonder if one day I won't have to read stupid posts like your's. The GameCube is profitable. Allow me to repeat: PROFITABLE. You don't shut down a business that brings in money. Besides the portable games market is pretty much being milked for all it's worth as it is.



No need to insult another forum member for discussing his/her own opinion.

 

[Blade]

I'd like to note that Nintendo had their "free game w/purchase of GameCube" deals only for the last 2 months of the fiscal year. This isn't a big deal, but it's plain to see that MS got a nice little boost from their JSRF/SegaGT bundle.

 

[zurich]

I'd like to note that Nintendo had their "free game w/purchase of GameCube" deals only for the last 2 months of the fiscal year. This isn't a big deal, but it's plain to see that MS got a nice little boost from their JSRF/SegaGT bundle.

Duh

Its Nintendo's fault for not trying to be competitive earlier (Xmas season).

 

[Almasy]

I don´t intend to sound like a fanboy, but I think this is a trend that will continue, with diminishing sales with each year. The reason why? Simple, aside from Pokémon, every single one of their franchises is slowly diminishing in popularity.
For example, Mario failed to sell a million copies by itself in a single territory, when M64 sold like 6 million copies worldwide. Zelda:OoT also sold around 8 million copies, and so far, WW wasn´t even able to hit the 700k figure in Japan.

 

[Geeforcer]

I think Nintendo realize that themselves - note the complaining about GTA popularity.

 

[Goldni]

The weaker-than-expected GameCube sales at Nintendo, whose shares have fallen 52 percent the past year, may increase pressure on the company to follow in the path of rival Sega Corp., which scrapped its Dreamcast game console when sales flopped. The poor sales may also force software designers to abandon the machine in favor of Sony's PlayStation 2 or Microsoft's Xbox.

That my friends is pure 100% speculation and hyperbole by a somewhat slanted reporter i'd say. Ask Sega what they'd do different now if they had it to do all over again with the DC and going 3rd party.


Almasy Super Mario Sunshine is over 1 million sold in the US alone. What are you talking about?


If I'm figuring correct the GCN sittin around 9 million units worldwide since launch, corrrect?

 

[Goldni]

Let me add some more of my 2 cents in this. This is no one's problem but Nintendos. I'm beyond worrying about game companies now. They can blame GTA4 all they want. What am I supposed to do? Stop playing this Opus known as Zelda WW and pick up GTA4? Nintendo knows what it has to do. Two or three things and it's simple. The last 2 months sales in the US and Europe are the best example:

1st and formost before anything else...do a bundle deal. Look at Feb numbers and it speaks for itself. March should be a good follow up to Feb for GCN as well because of the "free game deal". When you have your system's sales more than double in a month (slowest time of the year at that) that's a pretty good sign of the efffectiveness of the game bundle. Nintendo should make the deal permanant and even offer a 2 game deal like MS. Maybe even a 3rd game offer.

2nd Advertise!! This speaks for itself. If you advertise for 3rd place you get 3rd place. One look at Feb and March and NOA will see the true effectual outcome of good plain ole advertising on TV and mags.

3rd Lower price of GCN. Look at Europe for this. GCN has sold like hotcakes when the large dept stores did the GCN sales at lower prices (sold more than PS2). This proved that it's the price that is hurting the GCN more than anything. People WILL buy the GCN even if it's for a '2nd console'. Now that GCN is being produced in China it's only Nintendo's greedy pride that is preventing them from lowering the price on each unit.
If they would, you'd see GCN selling very well globally..and a sustained rate.


In conclusion it's amazing that Nintendo can miss targets like that and still turn a profit like a Jewish banker (i kid). And they still came up close to the software goal of 55 mu with 44mu sold. That's pretty good for missing a hardware target so badly. I expect Zelda and other ibg games will help puch the 'tie ratio' over XB. Yes it will. Pre Zelda and pre free game bundle it was almost as high. Overall this is news that Ninty really needed to hear..although it may not have wanted to swallow it. This has to light a fire under Nintendo. Just 3 big (yet simple) things could change thier fortunes easily. They should have done these before Christmas.

I really do think after Gamecube 2 we'll see Nintendo blur the line between home console and handheld. By then the technology will be there for that to happen. I may be huge for them.

 

[zurich]

Good post Goldni, however.. has Nintendo run out of Aces? I mean, their 1-2-3 knockout punch was to be Mario, Metroid, and Zelda. Those have come and gone, and things are looking better for them, but what titles do they have in the _immediate_ pipeline to sustain this growth? And I don't mean Nintendo-fan titles, I mean serious mass-market titles like the ones mentioned above...

 

[Tagrineth]

Good post Goldni, however.. has Nintendo run out of Aces? I mean, their 1-2-3 knockout punch was to be Mario, Metroid, and Zelda. Those have come and gone, and things are looking better for them, but what titles do they have in the _immediate_ pipeline to sustain this growth? And I don't mean Nintendo-fan titles, I mean serious mass-market titles like the ones mentioned above...

Well they do have Megaman Network Transmission coming up very soon, which I am *so* getting the day it's released.