February 27 news, according to foreign reports, Nintendo on Friday halved the company's profit forecast for the fiscal year ending March 31. The reasons are due to the strengthening of the yen exchange rate and the sales of handheld game console being lower than expected . This also confirms the market's view that Nintendo needs to quickly transform into the mobile game industry.
Nintendo said that the company’s net profit for this fiscal year will be 17 billion yen (about 151 million U.S. dollars), lower than the 35 billion yen previously expected. The company pointed out that the reduction of its performance forecast for this fiscal year was mainly due to the strengthening of the yen against the US dollar. Nintendo's revenue mainly comes from overseas markets, and it holds a considerable amount of cash in US dollars and euros, which also makes the company's performance vulnerable to fluctuations in the exchange rate market.
Nintendo also lowered its forecast for shipments of the 3DS handheld game console from 6.6 million units to 7.6 million units. The company sold 8.7 million 3DS units last fiscal year. In addition, 3DS game sales are expected to drop to 47 million units, down from 56 million units in the previous fiscal year.
SMBC Eiji Maeda, an analyst at Nikko Securities, said, "Nintendo's lowered earnings forecast is in line with our expectations." Market analysts have previously warned that 3DS sales are expected to slow down due to the aging product line and lack of Launch popular game products to the market during this fiscal year. When Nintendo released its fiscal third-quarter earnings earlier this month, it was still maintaining its expectations for this fiscal year's performance. Investors were already shocked by Nintendo's optimistic attitude.
Nintendo is currently planning to join hands with DeNA to release its first mobile game in March this year, and plans to release four other games before March 2017. However, market analysts believe that Nintendo's first mobile game "Miitomo" is unlikely to bring much revenue to the company. The key factor is whether the second mobile game can bring huge revenue to the company.
Facing competitors such as free mobile games and Sony PS ecosystem, Nintendo's traditional video games are facing serious challenges. Nintendo is currently developing a next-generation video game system that it hopes will be popular with consumers. However, executives of this company also said that the mobile gaming business should be able to obtain sufficient revenue and become an important part of the company's revenue channels.
Nintendo's stock price closed at 15,970 yen on the Tokyo Stock Exchange on Friday, down 1.57% from the previous trading day.
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