Nintendo makes $1 billion profit for Q1 08

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koffieboon said:

BKK2 said:
What are "Inter-segment sales"? Japanese "Inter-segment sales" is where the vast majority of their operating income came from.

 

 Those seem to be sales from Nintendo of Japan towards their subsidiaries (so basically Nintendo of America and Nintendo of Europe). They aren't part of their consolidated figures.

(note - just thinking aloud here...)

Yeah, I figure something like:

"Games developed in Japan, are manufactured in Japan - and sales/profits go through Japan"

The other amounts are 3rd-party titles, maybe sold through Nintendo? Might explain high revenue, but tiny profits?

(might represent "manufacturing" revenues in various segments?)

...

Or maybe its the other way around:

 - NOA & NOE are treated like "3rd-party distributors"? - they collect the revenue, and pay NOJ for the products? Hence "inter-segment" sales?

 - that might explain the high revenues, and low margins in each region?

 - the 'third parties' is probably revenue collected from manufacturing by 3rd-parties - which explains why its "lowest" in Japan, and high in the US & Europe.

(when you release a DS or Wii title in Europe, you work with & pay NOE - not Nintendo Japan - so the money for production goes through them at some stage).

...

In the end - its the "sales to 3rd parties" that becomes the "Total consolidated revenue" - the other amount is just "internal transfers" between various branches of Nintendo.

What I find the most impressive about these figures:

 - on revenue of approx $4bn (US), Nintendo make profit of around $1bn (US).

That's a 25% profit ratio - very, very high.

(MS also make very high profit ratios - Sony on the other hand, was aiming to lift theirs from 3% to 5% over long term - I think they got it to around 4%)