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Nintendo CEO Seen Missing Profit Target as Wii U Founders

 

Nintendo Co. President Satoru Iwata has pledged that the “Super Mario” game creator will post a 100 billion-yen ($1 billion) operating profit this fiscal year as new software titles boost sales. Analysts say he’ll fail.

Iwata will announce a second straight annual loss tomorrow, losing 18.7 billion yen in the 12 months ended March 31, according to the average of 15 estimates compiled by Bloomberg. For the year started April 1, Nintendo may post operating income of 70 billion-yen, according to the average of 19 estimates -- short of a target he said was a personal “commitment.”

Nintendo’s Wii U, its first new home-gaming console since 2006, is failing to meet sales targets amid a delay to software releases that Iwata said were crucial to winning over consumers who increasingly play games on smartphones and tablet computers. Sony Corp. (6758) and Microsoft Corp. are also preparing to release upgraded consoles this year, adding pressure on the 53-year-old executive who has been in the role since 2002.

“Iwata hasn’t produced good results in recent years,” said Hideki Yasuda, a Tokyo-based analyst at Ace Securities Co. in Tokyo. “He can’t avoid being criticized.”

Yasuda rates the stock neutral, or hold. Only 4 of 20 analysts tracked by Bloomberg recommend buying Nintendo shares, while 13 recommend holding them and 3 recommend investors sell.

Yasuhiro Minagawa, a spokesman for Kyoto-based Nintendo, declined to comment on the difference between its commitment and analysts’ forecasts. The company will release earnings after the close of trade tomorrow.

Analyst Estimates

Nintendo rose 0.8 percent to 11,630 yen yesterday and has gained 27 percent this year, compared with a 31 percent surge in Japan’s benchmark Nikkei 225 Stock Average. Sony has jumped 71 percent.

Even as a weaker yen boosts the repatriated value of overseas earnings for Japanese exporters such as Nintendo, it may not be enough to meet Iwata’s profit target as the Wii U struggles to gain traction.

“I don’t think Nintendo can achieve 100 billion yen,” said Yoshikazu Shimada, an analyst at Tachibana Securities Co. “It’s hard for Nintendo to meet the target despite the weak yen’s tailwind.”

To help win back gamers from mobile devices, the company last year released the Wii U that combines TV screen action with a touch-screen controller in the company’s first new console since the original Wii was released in 2006.

Mistake Repeated

To avoid repeating the mistake Nintendo made with its 3DS handheld player, which had its price cut within six months of a 2011 debut on a lack of software, Iwata promised to keep the pipeline of games for the Wii U strong.

Preparing software would drive demand for hardware such as the Wii U, Iwata said in June before the machine’s debut.

He couldn’t maintain it as Nintendo halted new software for the Wii U at the start of this year because of development delays, Iwata said Jan. 31.

In Japan, the release of “Pikmin 3” in Japan is delayed to July from this spring, according to the company’s announcements. “Game & Wario” was pushed back to March 28 from the beginning of the year.

“He has been one step behind in some strategic points,” said Eiji Maeda, an analyst at SMBC Nikko Securities Inc. “Contents are important to increase game fans. But Nintendo couldn’t provide game titles.”

The company may have sold 3.5 million Wii Us last financial year, missing its target of 4 million, Takeshi Koyama, a Tokyo- based analyst at Mizuho Financial Group Inc. (8411), said in a report April 16. The company may sell 9 million units this fiscal year, he said.

Sony, Microsoft

Nintendo also faces tougher competition for game players from rival console makers in a market that is shrinking amid the shift to mobile devices.

Sony said in February it will release a Playstation 4 before the year-end holiday season, its first upgrade in seven years. Microsoft may unveil the successor to its Xbox 360 at the gaming industry’s E3 expo in June or a separate event in May, three people familiar with the plans said this month.

U.S. retail sales of video-game hardware, software and accessories fell 10 percent to $992.5 million last month, according to researcher NPD Group Inc. Hardware sales fell the most, declining 32 percent compared with a year ago, Port Washington, New York-based NPD said in April 18 e-mailed statement.

Sliding Yen

While Nintendo struggles with its main business, a weakening of the yen may give some relief, as it boosts the value of overseas earnings. The Japanese currency has depreciated about 13 percent against the U.S. dollar this year and touched a four-year low of 99.95 on April 11.

That may enable the company to post net income of 14 billion yen tomorrow, the company said in January.

While the currency helps, refreshing the game development pipeline is critical to a sustained turnaround, with Nintendo planning to add titles including the “Pikmin 3” and “Wii Fit U.”

“Nintendo can achieve the target if it can release the game softwares as planned,” said Yasuda at Ace Securities.

 

http://www.bloomberg.com/news/2013-04-22/nintendo-ceo-seen-missing-profit-target-as-wii-u-founders.html

 



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Nintendo will post a profit, even though an operating loss, like the 3rd quarter.

I wouldn't shed a tear if Iwata left, he's done a miserable job over the last two years.

Fatal Frame 5 localization petition: https://www.change.org/en-AU/petitions/nintendo-of-japan-north-america-localize-and-release-fatal-frame-on-wii-u-worldwide
Operation Zero on Twitter: https://twitter.com/0perationZer0

Bet with fatslob: Watch Dogs on Wii U will be technically worse than on PS3/360
Bet with mZuzek: Zelda Wii U will run at 720p (He says 1080p)

I still think firing Iwata now is a bit risky. Who will do Nintendo Directs? It just won't be the same.

I mean the man turned the 3DS around. Let's wait another year or so.

 Nintendopie  Was obviously right and I was obviously wrong. I will forever be a lesser being than them. (6/16/13)

People seem to forget that Nintendo is the hardest working console, handheld and software developer in the whole video game industry. It takes time to be successful, and some years while you're making hardware and software you will see some losses. What does these dumb ass analist expect, a profit every single year?

@ Otakumegane, Iwata is Nintendo Direct, agreed.

Nintendo Network ID: DaRevren

I love My Wii U, and the potential it brings to gaming.

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DaRev said:
People seem to forget that Nintendo is the hardest working console, handheld and software developer in the whole video game industry. It takes time to be successful, and some years while you're making hardware and software you will see some losses. What does these dumb ass analist expect, a profit every single year?

I can accept taking a hit in 2011 and 2012 when the Wii U was in production, but they had those two years to make sure software was ready for it, and their failure to do so is the reason for the Wii U's current state.



Fatal Frame 5 localization petition: https://www.change.org/en-AU/petitions/nintendo-of-japan-north-america-localize-and-release-fatal-frame-on-wii-u-worldwide
Operation Zero on Twitter: https://twitter.com/0perationZer0

Bet with fatslob: Watch Dogs on Wii U will be technically worse than on PS3/360
Bet with mZuzek: Zelda Wii U will run at 720p (He says 1080p)

curl-6 said:
I wouldn't shed a tear if Iwata left, he's done a miserable job over the last two years.

Four years. Don't forget about the buildup time for the new systems. Software is planned a long time in advance.

Where he fell short is that he allowed developers to do what they want and then also took the blame for them. Although the big issue is who is better qualified for his job. It's not like someone from within Nintendo would make major changes as new CEO and someone from outside Nintendo would probably destroy the company by putting games on smartphones due to a complete lack of understanding.

I'd rather see Iwata stay in charge and Miyamoto being relegated to a regular game developer. It was Miyamoto who made major decisions in the 3DS hardware design and software roadmap. The same is likely true for the Wii U, albeit there might have been a lot more people with major involvement.



Legend11 correctly predicted that GTA IV (360+PS3) would outsell SSBB. I was wrong.

Biased reviews are a pleasure to read. Just my opinion, of course.

I am Naive in the matter, but how exactly are they losing money time after time? 3DS is absolutely dominating, and selling tons of software. Even with weak Wii U sales, shouldn't they be making SOME money?


“Iwata hasn’t produced good results in recent years,” said Hideki Yasuda, a Tokyo-based analyst at Ace Securities Co. in Tokyo. “He can’t avoid being criticized.”


100000000% right

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RolStoppable said:

 someone from outside Nintendo would probably destroy the company by putting games on smartphones due to a complete lack of understanding.

Now that would be idiocy of the highest order. When you're a hardware company as well as a software one, you need to make sure people have to buy your hardware to play your software.



Fatal Frame 5 localization petition: https://www.change.org/en-AU/petitions/nintendo-of-japan-north-america-localize-and-release-fatal-frame-on-wii-u-worldwide
Operation Zero on Twitter: https://twitter.com/0perationZer0

Bet with fatslob: Watch Dogs on Wii U will be technically worse than on PS3/360
Bet with mZuzek: Zelda Wii U will run at 720p (He says 1080p)