Nintendo Issues a Profit Warning

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Source:ft.com

Nintendo has been forced to issue a profit warning considering that the sales of Wii U haven’t reached the expected level. In addition, a Japanese currency yen is strong, which influenced the company’s income. Although their most famous game in the recent past, Pokemon Go has still been massively popular, it couldn’t affect the profit plunge.

The operating profit is 30bn yen ($288m), which is three times lower than the company anticipated. The sales have plummeted 33% to reach 136.8bn yen ($1.3bn) for the previous six months until September. In addition to this, the company decided to sell a controlling stake in the Seattle Mariners, a baseball team they had owned since the 1990s.

Although the Pokemon Go turned out to be outstandingly successful, the game was designed and issued by Niantic, which is an offshoot of Google. However, Nintendo owns a one-third share of the Pokemon Company, which means that they haven’t made a substantial profit.

Source:godisageek.com
Source:godisageek.com

Be that as it may, their new device called Nintendo Switch will hit the market in March and it will hopefully improve the company’s financial status.

According to the Practical Analyst at Ovum consultancy, Paul Jackson, the Switch is essential for the future of the company’s home consoles. He said: “The Wii U was a car crash, basically. They fudged the communication and confused everybody with the controller and what the screen was for. As a result, it sold about a tenth of what the original Wii sold.”

The sales of PS4 and Xbox One topped the sales of Wii U by a large margin. However, they managed to sell their 3DS device successfully. Just for comparison, for the six-month period last year, Nintendo had a 9bn yen operating profit, whereas this year they recorded an operating loss of 5.95bn yen.

Although Nintendo shares have declined 8% in September, they are in a 46% rise from January 2016.