A look at whether or not Nintendo will beat its profit estimates...

[TheSource]

The financial times just ran an interesting story, which said:

"Nikko Citigroup games analyst Fukuda estimates that gross profit accumulated for every Wii console sold in Japan equates to 1,500 yen ($13), while in the US and Europe the figure is much higher due to greater retail prices. In the US and Europe, Fukuda estimates gross profit per console stands at 5,600 yen ($49) and 8,500 yen ($74) respectively. "

http://www.next-gen.biz/index.php?option=com_content&task=view&id=7180&Itemid=2

Basically, Nintendo is estimated to make...

$13 profit for each Wii sold in Japan (no pack in)

$49 profit for each Wii sold in the Americas (pack in allows higher price)

$74 profit for each Wii sold in Europe (pack in allows higher price)

Nintendo is expecting to ship 16.5 million Wiis from April 1 2007 to March 31 2008, on top of the 5.84 million shipped to retail by March 31 2007.

Lets say profit was ~$25 on average through 5.84 million/March 31 2007.  Wii hardware resulted in $150 million in profit.

Now, if Nintendo ships 5 miillion units to Japan, 6 million units to the Americas, and 5.5 million units to Others this fiscal year you get...

(6 million x $49)+($74 x 5.5 million) + ($13 x 5 million) ...$766 million in profit.  Not bad.

I don't think it is impossible for Nintendo to ship 18 or 20 million Wiis either.  Add an extra 1 million shipped to each region and you get another 136 million in profit.

Looking back at Nintendo's forecast shipment data, expectations are for 26 million DS units.  DS has been out for years now, so profit is likely $20 or more per DS - which adds at least another $60 million in profit.

This means Nintendo likely will make ~$1,000,000,000 in profit just on hardware.

Looking at software expectations in Nintendo's financial report, Nintendo expects to sell 212 million units of software.  It is quite possible Nintendo will beat this projection - since the Wii hardware forecast in June accompanied no software boost.  At $10 profit per piece of software, Nintendo would add another $2.12 billion in profit.  Note this may not include virtual console sales.  It certaintly does not include accessories or 3rd party liscencing fees.

Overall Nintendo expects ~$3,000,000,000 in profit, but I predict something more like:

Wii:

hardware shipped: 6/7/6 = millions   (6)($13)+(7)($49)+(6)($74)

DS:

hardware shipped: 30 million x $20 

 

Total software shipped: 

software: (250 million)($10)

 

Accessories + Liscencing profit: $500,000,000?

Estimated Profit: $60,000,000 + $500,000,000 + $2,500,000,000 + $865,000,000 ~

Estimated Profit: $3,925,000,000

So overall, I expect Nintendo to beat their own projections for profit.