Up until last month, Wii sales in the U.S. had been tracking behind 2008's pace by about 50 percent. More recently, Sony's PS3 outsold the Wii both here, according to NPD, and in Japan. The Wii decline is clearly starting to affect Nintendo's bottom line, analysts believe. Bloomberg is now reporting that Nintendo is likely to slash its profit forecast for the first time in six years.
Based on 10 analyst estimates compiled by Bloomberg since Nintendo cut the Wii’s price on September 24, net income is predicted to fall 11 percent to 249.3 billion yen ($2.7 billion) this fiscal year, which would be the first decline since March 2004. Currently, Nintendo's guidance is for net income of 300 billion yen.
“Nintendo may cut its profit projection about 30 percent because of sluggish sales in the first half, the price cut for the Wii and currency-related impact,” said Satoru Kikuchi, an analyst at Deutsche Bank AG in Tokyo. “Investors are expecting the company to fully reflect its business environment in its forecast.”
Another problem for Nintendo is that the yen has gained about 10 percent against the dollar in the last six months. The stronger the yen, the less valuable Nintendo's overseas sales, deposits and other assets in foreign currencies will be.
Nintendo will report its earnings on October 29.
