It's always the Yen's fault.
Kyoto, Japan, Oct. 1 (Bloomberg) -- Nintendo Co., the world's second-largest video-game maker, cut its full-year profit outlook 11 percent, blaming a stronger-than-expected yen and weaker sales of video-game consoles and hand-held players.
Group net income will probably be 80 billion yen ($657 million) in the 12 months ending March 31, down from the 90 billion yen the Kyoto-based company previously estimated. Full- year sales will probably be 600 billion yen, 6.3 percent short of earlier forecasts, the maker of the GameCube game console said.
A stronger yen hurts Nintendo's earnings because it lowers the value of overseas sales. The gamemaker, which gets more than half its sales from the U.S., Canada and Latin America, has relied on a boost from the weaker yen to offset competition from video- game rivals Microsoft Corp. and Sony Corp.
``I have been warning clients for months,'' said Amir Anvarzadeh, director of Japanese equity sales at KBC Financial Products in London. ``Its new group full-term forecasts look far too optimistic.''
Nintendo estimated it would lose about 26 billion yen this fiscal year related to its foreign-currency assets, more than a 10 billion-yen loss projection made in May. The new forecast was made on the assumption of a dollar-yen exchange rate at 123 yen in the six months ending March 31. The yen, which has risen since May, is currently trading at about 122 to the U.S. dollar.
Consoles, Games
Nintendo cut its forecast for sales of GameCube consoles to 10 million units for the year ending March from 12 million forecast earlier. The company also reduced its estimate for sales of Game Boy Advance hand-held players to 15 million from 19 million units.
The company raised its estimate for sales of video-game software for the GameCube console by 53 percent to 55 million copies in the year. At the same time, it cut estimates for sales of video games for Game Boy Advance by 12.3 percent to 50 million copies. Nintendo's market share in the U.S., the largest market in the $20 billion industry, will rise to about 30 percent in the year-end shopping season, up from about 20 percent now, said Nintendo's President Satoru Iwata.
For the first half just ended, the company behind the Pokemon characters said it probably had group net income of 18 billion yen, in line with its expectations. First-half sales of 205 billion yen lagged its own forecasts by 2.4 percent, it said.
Asset Sale
First-half earnings were in line with expectations because of a capital gain from the sale of Rare Ltd., a U.K. game publisher. Microsoft last month said it acquired a 49 percent stake in Rare from Nintendo for $375 million in cash.
Microsoft, whose Xbox console competes with Nintendo's GameCube and Sony's PlayStation 2 video-game system, is trying to add exclusive titles to boost hardware sales.
Rare, which made the video games ``Perfect Dark'' and ``Conker's Bad Fur Day'' for Nintendo game systems, no longer contributed much to Nintendo's game lineup, executives have said.
Rare's games accounted for 1.5 percent of Nintendo's total software sales in the fiscal year ended March 31, down from 9.5 percent in the previous year, Nintendo Vice President Perrin Kaplan said at the time of the sale.
All publicly traded companies in Japan are asked to forecast their financial results. They must revise the figures if they estimate that sales will be 10 percent higher or lower than predicted. They must also change them, if either net profit or current profit, which is pretax profit from operations, will be 30 percent higher or lower than the forecast.
