Nintendo FY 3/2009 Earnings Results & Projections: Coming May 7

[Ail]

TheSource said:

Can't say I agree with you yet although I don't think its an unreasonable argument if you look at the current hardware trends without 2009 software...But with software, June looks flat or up year over year since WSR will help in Japan, and the North American Wii market should be reinvigorated on the diversity of games released and new feature sets of late May to June. Punch Out and EA Active are both potentially enormous. Tiger Woods and the other early motion plus games should keep Wii elevated from the May boost, and June 2008 just wasnt that impressive for Wii so I think its in range. The main difference, to me between 2008 and 2009 is that May, June, and July look big this year, while in 2008 March, April, May were all huge. But when you factor in January and February 2009 being up over 2008 I don't think its much more than a draw through midyear. The end of the year for Wii already looks stronger in 2009 than in 2008 so I don't think sales will be down that much.

 

 I don't think a price cut outside of Japan makes sense financially by the way.

Lets say Nintendo sells 20 million units outside of Japan at the mininum.

Cut the price by 50$ and that's 1 billion $ of profit loss...

Lets say they sell 5 million more consoles  thanks to the cut and they still make 100$ of profit per console after the cut ( I do not see how they could make more),  that's 500 million more profit thanks to increased sales.

Total loss : 500 million $....(increased software could reduce this but not much, to make 500 million $ of profit of extra software Nintendo would have to move a shitload of Wii software thanks to the cut...)

Would be smaller if the cut happened later in the year but still at this point any price cut would eat into Nintedo's profit and they have been focusing on that aspect a lot....

 

The maths are different in Japan because the sales are so low a price cut easilly double them and actually not affect profit much...( the profit could even increase if you factor additional software sold).