Nintendo slashes earnings forecast as new 3DS will miss holiday shopping season
Japanese video game giant Nintendo Co. slashed its earnings forecast for the fiscal year ending in March as it announced that its highly anticipated 3DS console will miss the crucial holiday shopping season.
The revelation that Nintendo, which has dominated the video game business in recent years, will miss its revenue and net income targets is the latest bad news for an industry that has seen sales slump amid the economic slowdown.
Nintendo in particular has been affected as sales of its Wii console and games have slowed compared with the competing Xbox 360 from Microsoft and PlayStation 3 from Sony.
The 3DS, a new version of the company's portable game console that displays 3-D images without glasses, is Nintendo's next major initiative expected to boost sales. By missing the holiday shopping season, when game hardware traditionally launches, Nintendo probably will depress its sales prospects in the short term.
The 3DS will launch in Japan in February. Nintendo didn't announce a release date for the U.S. or Europe, but it had previously said it would hit all markets by the end of March.
"The release in Q4 has negatively impacted its financial outlook as we had expected a Q3 release in Japan," Wedbush Morgan analyst Michael Pachter said in a research note.
Nintendo dropped its sales forecast for the fiscal year ending March 31 by 21% to $13.15 billion. Net income is now projected to be 55% lower than previously expected at about $1.1 billion.
In addition to the release date for 3DS, Nintendo blamed the rising value of the yen and current sales trends. The company reduced sales forecasts for its Wii and DS hardware and games for the consoles.
Nintendo expects to sell 4 million 3DS devices and 15 million 3DS games by the end of March.
Jesse Divnich, a vice president at Electronic Entertainment Design and Research, said a later release date could help Nintendo get more outside publishers to develop games in time for the device's debut. "By allowing additional development time through March 2011, a superior product lineup should be available at launch," he wrote in an e-mail.
The 3DS will cost about $300 in Japan. The original, non-3-D DS cost only $150 when it was launched in 2004.
-- Ben Fritz
Photo: Nintendo 3DS. Credit: Nintendo Co.