Nintendo\'s 2nd-Half Profit Rises 8% on Yen, GameCube (Update1)
By Hiroshi Suzuki
Tokyo, May 30 (Bloomberg) -- Nintendo Co. said net income rose 8 percent in the second-half because of a weaker yen and the release of its GameCube game console, leading to record profit at the world\'s second-largest video-game maker for a second year.
Group net income for the six months ended March 31 was 72.1 billion yen ($581 million), or 508.92 yen a share, up from 66.5 billion yen, or 470.01 yen, a year ago. Aided by the GameCube in the U.S. and Japan, revenue rose 21 percent to 329.2 billion yen.
Faced with mounting competition, Nintendo cut the price of the GameCube last month to ensure the machine is the lowest priced among consoles from Sony Corp. and Microsoft Corp. The cuts may be eating into profit. While Nintendo said sales will rise 15 percent this year, net income will probably decline by the same percentage because of a stronger yen and the price cuts.
``The forecast is a signal to competitors that Nintendo will match any price cuts if that\'s what is required,\'\' said Ben Wedmore, an analyst at HSBC Securities Japan Ltd., who has a ``Buy\'\' rating on Nintendo\'s shares. ``Nintendo has been expecting a price war in the console market for at least nine months. That is in the forecast.\'\'
For the full year, Nintendo\'s profit rose 10 percent to 106.4 billion yen on a 20 percent gain in sales to 554.9 billion yen. The profit results were slightly worse than the company\'s April forecast of 106 billion yen in full-year net income while sales exceeded the company\'s 550 billion yen sales estimate.
Nintendo does not report second-half results. Bloomberg News calculated the figures by subtracting first-half results from full- year earnings.
Shipment Goals
This year, the first full year Nintendo will have sold the GameCube, the company plans to sell 12 million of the consoles and 36 million software titles for the machine.
Nintendo began selling GameCube, successor to its N64 game player, on Sept. 14 in Japan and later in the U.S. and Europe. Console shipments in the fiscal year ended March 31 totaled 3.8 million, Nintendo said. The company had hoped to ship 4 million GameCubes in the period.
To lower costs, Nintendo said it plans to start production of the GameCube in China.
Along with the GameCube, Nintendo is also the maker of the GameBoy Advance hand-held player and its predecessor, the GameBoy. The company dominates the hand-held market with sales of more than 110 million units worldwide since the GameBoy\'s introduction.
This fiscal year, Nintendo said it aims to sell 19 million Game Boy Advance players, or 11 percent more than last year. Sales of software for the player, which features a larger screen and faster processing power than the original GameBoy, are estimated at 57 million units.
Management Changes
Changes may be ahead this year for the company behind video- game characters Mario the plumber, Donkey Kong and Zelda. Hiroshi Yamauchi, who transformed the company from a local card game maker into the video-game industry\'s leader at one time, will resign from his position as president, handing management duties to Satoru Iwata, who joined Nintendo two years ago.
Investors say they\'ll be interested in how the new management copes with Yamauchi\'s legacy while contending with competition from Microsoft\'s Xbox and Sony\'s dominance of the $20 billion video-game industry. Underscoring that fact, many of Nintendo\'s gains last fiscal year came not from its video-game operations, but from the yen\'s weakness.
At the end of March, Nintendo held cash and deposits worth $3.06 billion and 1.64 billion euros, up from $1.94 billion and 1.54 billion deutsche marks a year ago.
The company uses exchange rates at the end of its first half or yearend to re-evaluate the worth of its foreign-currency assets, whose value in yen terms surges when the Japanese currency weakens.
This fiscal year, Nintendo sees a loss of about 10 billion yen from its foreign-currency assets because of the yen\'s current strength.
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Whoopdeedoo, looks like all I needed to do was wait for another Nintendo article to have my arguments validated. They already said they shipped 1.57 consoles in Japan. Well using my super-computer like brain, 3.8 million shipped - 1.57 million shipped for japan = 2.23 million shipped for North America! Previously, those 2.23 million were believed to have been sold-through numbers, and previously they were thought to be USA only, where as actually they were shipped numbers to all of NA.
Yeah, it feels damn good rubbing it in. ahhh, but you guys may not know what being right all the time feels like.
Eric Jacob
