For the first time in its history as a publicly traded company, Nintendo is forecasting an annual loss.
Nintendo's latest financial report shows that the company is forecasting an annual loss for the first time since they started making video games.
For the six-month period ended on September 30, Nintendo's net loss was over 70 billion yen, compared to last year's loss of only 2 billion yen. Nintendo had previously forecasted a loss of just over 35 billion yen for that same period. Sales for the Nintendo DS and 3DS hardware being lower than expected and yen appreciation relative to foreign currencies were offered as the primary reasons for the missed estimates. These losses, while significant, are substantially less than had been rumored.
In July, Nintendo had predicted exchange rates of 77 yen to the U.S. dollar and 115 yen to the euro. However, the actual exchange rate ended up being 80 yen to the dollar and 106 yen to the euro. 79.2% of Nintendo's total sales were conducted outside of Japan, and the net effect of converting local currency to yen resulted in 52.4 billion yen in exchange losses (about 75% of their total loss).
Nintendo had forecasted sales of 240 billion yen for the six month period, however softer than expected sales meant the actual number was only 215.7 billion yen—10.1% below estimates. Beyond the low hardware sales, Nintendo also explained that the 3DS does not yet have "many hit titles" and a lower number of new titles were released for Wii. Additionally, the price drop of the 3DS has lead to "improving" hardware sales. Nintendo is expecting the release of titles such as Mario Kart 7 and Super Mario 3D Land to help the 3DS hardware sales to continue to improve.
As for the end of the fiscal year (March 31, 2012), Nintendo is projecting a net loss of 20 billion yen, harshly contrasted against their previous forecast, a profit of 20 billion yen. This is the first time in Nintendo's history that they've posted a loss annually.
Finally, in regards to their end-year sales, the estimates are currently set at 790 billion yen, down from the earlier estimate, 900 billion.