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Nintendo projects FY loss in dramatic reversal of outlook

  • Nintendo (NTDOF) has warned that it expects an operating loss of ¥35B ($336M) for the fiscal year through March instead of a profit of ¥100B, as the company had previously forecast. Analysts predict ¥54.7B.
  • Nintendo also projects a net loss of ¥25B vs a previous outlook for a profit of ¥55B, and it has cut its revenue estimate by 36% to ¥590B. The company will pay an FY dividend of ¥100 instead of ¥260.
  • Nintendo said the dramatic reversal was due to much lower-than-expected sales of its Wii U and 3DS games machines during the holiday season. That might have something to do with the success of Sony's (SNE) PlayStation 4 and Microsoft's (MSFT) Xbox One, both of which were launched in the run up to Christmas.
  • Nintendo now expects FY Wii U sales of 2.8M instead of 9M and 3DS sales of 13.5M vs 18M. The firm also cut its software outlook. (PR here and here.)
Comments (11)
  • scchan.2009
    , contributor
    Comments (202) | Send Message
     
    From a business point of view, Nintendo may consider writing Wii U off and aim for the next thing. A difficult thing in the tech and engineering business is that development cycle takes time; it takes few years for Nintendo to come with a new device, a few years for GE and Boeing for its next mean machine, and a few years for Intel and NVDIA for its next semiconductor. If you are getting into the engineering and tech business, you have to have the balls to stay through multiple cycles. (So yes, with Intel also in the news today, Intel is NOT a 1/4 to 1/4 stock).

     

    That is why balance sheet matters, you can only afford R&D and headwinds if you are in good financial position (most big name tech including both Intel and Nintendo have strong balance sheets even if they have short/medium term cash flow problems) . And let be frank, no real companies will never encounter headwinds.
    17 Jan, 05:20 AM Reply Like
  • Ruffdog
    , contributor
    Comments (1233) | Send Message
     
    If they have any valuable patents look for MSFT or Sony to get them.
    17 Jan, 07:33 AM Reply Like
  • scchan.2009
    , contributor
    Comments (202) | Send Message
     
    I do not think any reasonable tech firm with enough medium-long term vision would sell off its IP. It is also like saying MSFT selling off the Windows IP. The IPs and patents are what make tech firms valuable.

     

    Anyway as I own both INTC and Nintendo ADRs (my entry point was very low when Nintendo was trading below book value), today will look quite ugly. However, it wasn't ugliest day I had seen (as a shareholder of POT). Of course I have my share of nutty single-day gains as well. The trick is to hold tight through periods of volatility, and actually be willing to BUY through volatility and pessimism.

     

    I just checked Nintendo balance sheet - more than half of their book value are cash-like and long term investment assets (well presumably that includes JGB, laugh). They are sitting about 10 billion USD liquid asset with no long term debt , taking a 50 million loss for one year is acceptable. The story won't be the same for a highly leveraged company. In a sense 2013 loss wipe out a small fraction of Nintendo balance sheet. Well if this continues for 6-7 years than I will be concerned about the company's solvency and balance sheet; and as it stands now even today fall about 15%, I still made 30% profit if I do decide to sell.
    17 Jan, 08:23 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1870) | Send Message
     
    While XBox One was #1 seller in the US in December per TheVerge.

     

    TheVerge: Xbox One was the top-selling console in the US last month http://bit.ly/19z0KUN
    17 Jan, 07:45 AM Reply Like
  • caligrowthresearch
    , contributor
    Comments (117) | Send Message
     
    The Xbox One was only selling because the PS4 was already sold out.
    17 Jan, 09:47 AM Reply Like
  • ekin09
    , contributor
    Comments (99) | Send Message
     
    MSFT ain't complaining and neither is AMD
    17 Jan, 11:08 AM Reply Like
  • JDDurango
    , contributor
    Comments (137) | Send Message
     
    "That might have something to do with the success of Sony's (SNE) PlayStation 4 and Microsoft's (MSFT) Xbox One, both of which were launched in the run up to Christmas."

     

    LOL, such brilliant insight.
    17 Jan, 09:01 AM Reply Like
  • scchan.2009
    , contributor
    Comments (202) | Send Message
     
    It is too early to tell if PS4 and Xbox 1 will do good. Anyway, given how weak consumer markets now, stuff spent on A means less spent on B, and there will always be some excitement for the new kids in the block. As a business, Sony is doing just quite as terrible as Nintendo. Before today (laugh), Nintendo is actually valued higher than Sony by capitalisation (but I am not sure that difference is justified). However, if both companies can rediscover its former glory, both will worth a lot more than what they are now.
    17 Jan, 10:48 AM Reply Like
  • jeezuz30
    , contributor
    Comments (289) | Send Message
     
    Glad to see systems aimed at real gamers (PS, XBOX) beating out the casual nintendo machines.
    18 Jan, 10:34 AM Reply Like
  • psychological-dividends
    , contributor
    Comments (570) | Send Message
     
    Now why can't Microsoft operate its whole company as aggressively and as innovatively as XBOX?

     

    That's my question.
    18 Jan, 12:16 PM Reply Like
  • midcapwarrior
    , contributor
    Comments (27) | Send Message
     
    Because the other business's subsidize Xbox.
    Unless they want to become Amazon which has decided to not make money on anything for the foreseeable future.
    Pretty sure that model would crush the stock as only Amazon can spin that fairy tale.
    20 Jan, 12:18 PM Reply Like
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