Nintendo, Sony, Capcom Quarterly Data (Apr-Jun 2010) out Tonight

[Viper1]

mai said:

Viper1 said:

M.U.G.E.N said:

Ninty posted a huge loss (what R&D? lol most of the R&D isn't done by them, spin it all you want)

Actually Nintendo had a $500 million but took on a $794 million one time exchange rate charge resulting in the posted $288 million loss.

 

No spin, just facts.

Actually I don't very well understand what "foreign exchange loss" suppose to mean. I need a basic lesson on accounting and/or economics to clear things up.

Nintendo's sales are mainly made abroad, so they recieve their payment in USD and EUR. It's naturally to expect they are to be hit by exchange rates this year harder than last year (afaik USD is ~5 yen cheaper on average for reporting period, EUR compared to yen is down a few points as well, though overall sales are lower than the same quarter sales last year). They netted $475 in Q1 of FY 3/2010, how these marginal changes in exchange rates translate into net loss of $283M?

UPD: Well, according to the article on the site the main factor responsible for such a loss is likely DS HW, which is almost 50% down this quarter, coupled with price cuts:

DS - 3.15m / 22.42m (2009) - 5.97m / 29.09m (2010)
Wii - 3.04m / 28.17m (2009) - 2.23m / 31.07m (2010)

I wonder how big is the margin at which they're selling DS hardware if it incurred such losses? =)

Take a product that generates $20 profit per sale.  Sell 2 million and you get $40 million in profit.  Now say the following year you only sell 1 million.  Now profits are only $20 million.  So even though sales are down by a lot, you still profit.  As this relates to the point in hand, just because sales were down, that doesn't translate into losses by any means.  It just means less profit than before.

Now the $794 million one time exchange charge could mean a few things sucha as Nintendo moving some of it's financial holdings from the Yen to the Dollar, an asset exchange involving the Yen and Dollar or any of several other things that basically involve the 2 currencies.

They did the same thing in 2004 or 2005 and it marked the first quarterly loss in their 100 year history.  This marks the second and it's for the same reason.