BKK2 on 25 July 2008
Nintendo & Sega H1 93 profits:
Nintendo's Profit Declines
Published: November 19, 1993
The Nintendo Company, once the unchallenged king of the video-game industry, said today that it had suffered its first drop in earnings in 10 years in the face of fierce competition from Sega Enterprises Ltd.
Nintendo, the maker of Super Mario games, said its first-half pretax profit dropped 24 percent from a year earlier, to $576 million. Analysts, who had expected $741 million, said the result signaled the end of a 10-year boom that made Nintendo Japan's most profitable company.
"Competition from rival makers and the firm's structural problems were Nintendo's main problems," Takeo Naruse, an analyst at the Daiwa Institute of Research, said.
A Nintendo spokesman said the strong yen and sluggish worldwide consumer spending were the main reasons for the poor result.
Analysts said the end of the era of phenomenal sales growth in the video-game industry was also apparent from results Sega announced last week. Sega's half-year pretax profits inched up 4.3 percent, to $269 million.
Since 1989, Sega's pretax profits had risen 50 to 70 percent a year. But Nintendo is suffering more as it faces tough competition from Sega. Nintendo's decision to delay development of next-generation home entertainment systems with multimedia functions has allowed its rival to forge ahead in the United States with powerful game machines.
In addition, Sega appears to be better positioned to handle the yen's appreciation. To keep production costs down and reduce the risks of currency fluctuations, Sega now produces 50 percent of its products in Taiwan, Hong Kong and China. Nintendo exports all of its products for the American market from Japan.
Nintendo's stock has been sliding, falling this week below $66 for the first time in five years.
Published: November 19, 1993
The Nintendo Company, once the unchallenged king of the video-game industry, said today that it had suffered its first drop in earnings in 10 years in the face of fierce competition from Sega Enterprises Ltd.
Nintendo, the maker of Super Mario games, said its first-half pretax profit dropped 24 percent from a year earlier, to $576 million. Analysts, who had expected $741 million, said the result signaled the end of a 10-year boom that made Nintendo Japan's most profitable company.
"Competition from rival makers and the firm's structural problems were Nintendo's main problems," Takeo Naruse, an analyst at the Daiwa Institute of Research, said.
A Nintendo spokesman said the strong yen and sluggish worldwide consumer spending were the main reasons for the poor result.
Analysts said the end of the era of phenomenal sales growth in the video-game industry was also apparent from results Sega announced last week. Sega's half-year pretax profits inched up 4.3 percent, to $269 million.
Since 1989, Sega's pretax profits had risen 50 to 70 percent a year. But Nintendo is suffering more as it faces tough competition from Sega. Nintendo's decision to delay development of next-generation home entertainment systems with multimedia functions has allowed its rival to forge ahead in the United States with powerful game machines.
In addition, Sega appears to be better positioned to handle the yen's appreciation. To keep production costs down and reduce the risks of currency fluctuations, Sega now produces 50 percent of its products in Taiwan, Hong Kong and China. Nintendo exports all of its products for the American market from Japan.
Nintendo's stock has been sliding, falling this week below $66 for the first time in five years.
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