Gotta love the fuzzy logic and fuzzier math.
Nintendo reports a loss on a Wii U unit the minute it is manufactured. My suspision is Nintendo was scheduled to manufacture 5.5 million by year end. If we simply look at how inflexible they have been with updating firmware despite patching notority, we'd have to assume Nintendo's cost structure with the OEM is tight tight tight. Each assembly line maxed to optimize cost, therefore Zero flexibility on unit delivery.
My guess is Nintendo may have lowered the unit shipped projections, but internally the same units of
Wii U was gonna be produced regardless, and with that assumption, the huge dent to quarter 1 buttomline and the seemingly ballsy 100 billion net income fiscal 2014 seem to make sense.
Nintendo put most of their resources on 3DS for 2013, having a much bigger installed base and unit sale momentum to make the software push worth it. Took the Wii U hit by pretty much sabbotaging it themselves when they saw little hope (pushed back all meaningful SW releases during 4th quarter. This ensures fiscal 2013 would breakeven or slightly profitable, and fiscal 2014 with a fighting chance of much improved buttomline.
If we look at the 3rd quarter unti composition. Wii U's 3 million vs all others combined of roughly 8 million, that 3:8. Fiscal 4th unit projections of Wii U 1 million vs roughly 3 million others combined. The Wii U shipped ratio is roughly the same quarter to quarter. The loss expected for the 4th quarter obviously takes SW into consideration, but from first glance I really thought something was kind of off. So it would be intersting for us to observe Inventory numbers for the 4th quarter to see if in fact Nintendo took advantage of the lower of cost or market accounting to shift losses onto a left for dead year.
