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Nintendo Reports Weak Decline

May 6, 2010

On Thursday, Nintendo posted a decline in full year net profit and forecast a continued slump next year as sales of its Wii console have slumped.

The maker of the world’s most popular console saw net profit fall 18 percent in the year to March as it cut prices of the Wii in response to competition from Sony and Microsoft in the multi-billion dollar industry.

Nintendo cut the Wii’s price by a fifth last September, which was the first move like this since the console was launched in 2006.

“This fiscal year, business performance was negatively impacted by a price reduction on Wii hardware, fewer strong Wii software titles in the first half and appreciation of the yen,” the company said in a statement.

Net profit fell 18.1 percent to $2.45 billion in the year to March from a year earlier, mostly due to weak sales in the early part of 2009.  Revenue was down 22 percent to $15 billion.

Nintendo remained modest in its forecast for this fiscal year, expecting a net profit of $2 billion, which is 12.5 percent less than last year.

Nintendo sold 20.5 million Wii consoles around the world last year, down from 26 million the previous year.  The Kyoto-based company predicts 18 million Wii sales in the year to March 2011.

However, new Wii software such as “Wii Sports Resort” and “Wii Fit Plus” helped raise the console’s total lifetime sales to 70.93 million units.

The Wii has outsold Sony’s PlayStation 3 and Microsoft’s Xbox 360 since its 2006 debut.

The company’s Nintendo DS device sold 27.11 million units, down from 31.18 million the previous fiscal year.

Now the company plans to launch a new 3D handheld device that will be able to capture the new gaming dimension without special glasses.

Nintendo hopes the new device will boosts sales in the current fiscal year to March 2011.

Analysts say Nintendo faces tough competition ahead as Sony and Microsoft plan to launch their own motion-sensing controllers later this year.

“By this stage of the game it shouldn’t be a surprise to anyone that Nintendo’s profits were down year-on-year. New hardware will be a key factor in turning profits around for Nintendo,” Macquarie analyst George Hogan told AFP.

The launch of the 3DS “could largely determine for many investors whether Nintendo just got lucky in the last cycle or really has turned itself into a much more profitable company.”

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