| RolStoppable said:
On the other hand, Nintendo has lost about $1.2 billion like you say, but one of those years precedes the Wii U. That's on the 3DS and its major price cut not too long after it had launched. Nintendo also erected a new building in Kyoto during that timespan which factors into their balance sheet, so the losses that the 3DS and Wii U accumulated actually aren't as big as it seems at a first glance. Nintendo didn't aggressively cut the price of the Wii U, so the road back to overall profitability for the system isn't that long; but given how low its hardware sales are and will be, Nintendo won't make much from it. However, should Nintendo fail to break even on the Wii U overall, then the only issue with my initial claim is the wording. Instead of more profitability for Nintendo, it should say lower losses. |
Cash and buildings (even construction in progress) are both assets. Nintendo spending money on a building in Kyoto isn't booked as a loss. The bigger factor at the moment for Nintendo is their large glut of inventory, though they have managed to burn through a decent portion over the last 6 quarters. Even so, they are still more than 70% higher than before they were manufacturing Wii U's. This is probably the biggest factor for the lack of a pricecut. Hypothetically, if they have 2 million Wii U's on their balance sheet as $300 each, they don't want an immediate $200 million dollar loss by cutting it to $200. That is before they even get into manufacturing new ones at a loss.
