Nintendo 1H 2012 results - $367M operating loss, 5.06M 3DS, 5.5M Wii U forecast

Kazerei

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Six months earnings

Forecast differences and forecast modifications

Supplementary information *NEW*

Presentation by the president *NEW*

Financial results
Comments
Hardware/software sales
Financial forecasts

Historical hardware/software sales

NDS Worldwide Unit Sales (Unit:Million)

Code:
Hardware       Ap-Jn    Jl-Sp    Oc-Dc    Ja-Mr      FY      LTD

FY 2004/05       -        -      2.84     2.43      5.27     5.27

FY 2005/06     1.38     2.19     5.59     2.30      11.46    16.73

FY 2006/07     4.54     5.55     8.79     4.68      23.56    40.29

FY 2007/08     6.98     6.37     11.15    5.81      30.31    70.60   

FY 2008/09     6.94     6.79     11.89    5.56      31.18    101.78

FY 2009/10     5.97     5.73     11.65    3.76      27.11    128.89

FY 2010/11     3.15     3.54     9.01     1.82      17.52    146.42

FY 2011/12     1.44     1.14     2.06     0.46      5.10     151.52

FY 2012/13     0.54     0.44       -        -       0.98     152.50



Software       Ap-Jn    Jl-Sp    Oc-Dc    Ja-Mr      FY       LTD

FY 2004/05       -        -      5.01     5.48      10.49    10.49

FY 2005/06     5.32     7.98     22.60    14.05     49.95    60.44

FY 2006/07     18.35    24.81    50.64    29.75     123.55   183.98

FY 2007/08     34.26    41.24    71.39    38.73     185.62   369.61   

FY 2008/09     36.59    48.43    78.76    33.53     197.31   566.92

FY 2009/10     29.09    42.06    50.23    30.21     151.59   718.5

FY 2010/11     22.42    32.42    44.15    21.99     120.98   839.48

FY 2011/12     12.13    16.86    22.21    9.62      60.82    900.31

FY 2012/13     8.48     8.82      -        -        17.30    917.61
Wii Worldwide Unit Sales (Unit:Million)

Code:
Hardware       Ap-Jn    Jl-Sp    Oc-Dc    Ja-Mr      FY      LTD

FY 2006/07       -        -      3.19     2.65      5.84     5.84

FY 2007/08     3.43     3.90     6.96     4.32      18.61    24.45   

FY 2008/09     5.17     4.93     10.42    5.43      25.95    50.39

FY 2009/10     2.23     3.53     11.30    3.48      20.53    70.93

FY 2010/11     3.04     1.93     8.75     1.36      15.08    86.01

FY 2011/12     1.56     1.79     5.61     0.88      9.84     95.85

FY 2012/13     0.71     0.61      -        -        1.32     97.18

                 

Software       Ap-Jn    Jl-Sp    Oc-Dc    Ja-Mr      FY       LTD

FY 2006/07       -        -      17.51    11.33     28.84    28.84

FY 2007/08     15.98    20.99    47.38    35.25     119.60   148.44  

FY 2008/09     40.41    41.00    82.37    40.80     204.58   353.02

FY 2009/10     31.07    45.14    80.43    35.17     191.81   544.83 

FY 2010/11     28.17    37.04    85.33    20.72     171.26   716.09

FY 2011/12     13.44    23.01    52.61    13.31     102.37   818.46 

FY 2012/13     8.47     15.27      -        -       23.74    842.20
3DS Worldwide Unit Sales (Unit:Million)

Code:
Hardware       Ap-Jn    Jl-Sp    Oc-Dc    Ja-Mr      FY     LTD

FY 2010/11       -        -        -      3.61      3.61    3.61

FY 2011/12     0.71     2.36      8.36    2.10      13.53   17.13       

FY 2012/13     1.86     3.20        -       -       5.06    22.19



Software       Ap-Jn    Jl-Sp    Oc-Dc    Ja-Mr      FY     LTD

FY 2010/11       -        -        -      9.43      9.43    9.43

FY 2011/12     4.53     3.60     19.91    7.96      36.00   45.42    

FY 2012/13     7.39     11.64      -       -        19.03   64.45

Previously: Nintendo announces Q1 results - $220 Million Quarterly Loss, 1.86M 3DS
 

GavinGT

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They adjusted their forecasted operating income down by a lot, but not their forecasted net sales. Why would they do that?
 

Oersted

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Japan, The Americas, Other. Somebody should photoshop a Nintendo globe out of this.
 

bigtroyjon

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They adjusted their forecasted operating income down by a lot, but not their forecasted net sales. Why would they do that?
posted this in another thread

Looking at it I'm guessing they had some kind of issues with WiiU manufacturing that increased the costs slightly. Revenue forecasts were lowered less than profit which means costs are going up. Since the units forecast actually dropped a bit, means that costs per unit went up. WiiU only thing that would really make sense. Can't imagine Wii, DS or 3DS costs went up unexpectedly in the last 6 months.
 
Jul 15, 2004
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They adjusted their forecasted operating income down by a lot, but not their forecasted net sales. Why would they do that?
expectation of higher costs and further currency impact, most likely

problems with the protests & fire at the Wii U factory may factor in in some way.. although I can't remember when that happened to be honest, may not have even been the right quarter.
 

Oersted

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They adjusted their forecasted operating income down by a lot, but not their forecasted net sales. Why would they do that?
They mention the WiiU hardware and exchange losses as examples.


Fake-Edit: Beaten, slightly.
 

AniHawk

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posted this in another thread

Looking at it I'm guessing they had some kind of issues with WiiU manufacturing that increased the costs slightly. Revenue forecasts were lowered less than profit which means costs are going up. Since the units forecast actually dropped a bit, means that costs per unit went up. WiiU only thing that would really make sense. Can't imagine Wii, DS or 3DS costs went up unexpectedly in the last 6 months.
maybe they had to make it weaker and that increased the cost.
 

JaxJag

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I think Nintendo is at the point where they will need to evolve their software, and online infrastructure to stay relevant.
 

Jackano

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Still minor losses but still healthy. Sequels like Pokémon B&W2 and NSMB2 didn't really proved to do well, hopefully they will not keep this style any longer for Wii U games.

Next quarter will be the real thing, Wii U sales and holiday period.
 

IrishNinja

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was waiting on this thread - so is this good? i mean i recall iwata saying they're finally back in the black on 3DS as of fall or so, so that should be helpful...WU getting out the gate over here in just under a month should really make next report better, i'd imagine.

strong yen + impact of disaster losses + r&d all relatively the same time earlier this year if i'm not mistaken, no? in light of that, im trying to make sense of that operating loss, whether it's bad or "couldve been way worse" status, etc.

Still minor losses but still healthy. Sequels like Pokémon B&W2 and NSMB2 didn't really proved to do well, hopefully they will not keep this style any longer for Wii U games.

Next quarter will be the real thing, Wii U sales and holiday period.
yeah, id love for that 3rd building hiring/new IP rumor to be part of the strategy in the face of this

maybe they had to make it weaker and that increased the cost.
they should just go on ebay for legacy parts, i find its cheaper
 

metalslimer

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I think Nintendo is at the point where they will need to evolve their software, and online infrastructure to stay relevant.
Or maybe having a dead home platform while manufacturing Wii Us that you can't sell is not a good strategy. And what does Pokemon even have to do with this? It's not even the same release period this is talking about
 

StreetsAhead

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I think Nintendo is at the point where they will need to evolve their software, and online infrastructure to stay relevant.
And nothing to do with the currency loses and the fact their home console revenue is currently significantly reduced? Right, it's the games and online.
 
Feb 21, 2007
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I hear most decisions out of NoA operations have to be approved by NoJ, and this handcuffs NoA's freedom to market the way they want to in America. Maybe NoJ should consider loosening their chains on NoA to give their marketing/promotions team a bit more freedom because what they are doing now clearly isn't working too well.
 

metalslimer

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I hear most decisions out of NoA operations have to be approved by NoJ, and this handcuffs NoA's freedom to market the way they want to in America. Maybe NoJ should consider loosening their chains on NoA to give their marketing/promotions team a bit more freedom because what they are doing now clearly isn't working too well.
There is a much larger problem with the 3DS in the west than marketing. Shrinking market, coupled with a very high price compared to the things that are shrinking said market, and a lack of software are the problems.
 

Shiggy

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If only they announced some interesting and truly innovative software titles for 3DS. It's no surprise that sales of that system aren't too high in the US and Europe, if not even I'm interested in its software lineup. And I loved the Wii and DS for their first party titles.

iOS and Android finally led to some competition on the handheld market.
 

Striek

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3DS hardware forecast down by 1M for the FY, software down by 3M.

Wii+Wii U hardware forecast steady, software up by 4.5M.

Not the worst result ever tbh.
 

Toki767

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I hear most decisions out of NoA operations have to be approved by NoJ, and this handcuffs NoA's freedom to market the way they want to in America. Maybe NoJ should consider loosening their chains on NoA to give their marketing/promotions team a bit more freedom because what they are doing now clearly isn't working too well.
I'm actually surprised that NoJ allowed NoA to work on Nintendo TVii and incorporate that into the Wii U. Hopefully they let NoA at least try to work on the online a little.
 

GCX

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Why do some companies like Nintendo announce Q2 results at the end of Q3 while other companies release Q3 information right after Q3 ends? Can companies just choose freely when they'll give their earning reports?
 

AniHawk

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If only they announced some interesting and truly innovative software titles for 3DS. It's no surprise that sales of that system aren't too high in the US and Europe, if not even I'm interested in its software lineup. And I loved the Wii and DS for their first party titles.

iOS and Android finally led to some competition on the handheld market.
yeah, nintendo got kinda complacent in the handheld market and put all their focus on the console market, running under the assumption the 3ds would be an automatic hit.

well, at least there's paper mario and fire emblem. strange how the 3ds is like the gba and needs intelligent systems to keep me interested.

Why do some companies like Nintendo announce Q2 results at the end of Q3 while other companies release Q3 information right after Q3 ends? Can companies just choose freely when they'll give their earning reports?
nintendo's fiscal year ends in march. april-june = q1, july-september = q2, etc
 
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I think Nintendo is at the point where they will need to evolve their software, and online infrastructure to stay relevant.
Yeah, the slow 3DS sales and especially their abysmal performance with titles like Nintendogs, Brain Training etc shows that those were one trick ponies.

Similarly I don't expect Wii Fit U to be anywhere near as successfull as Wii Fit and Plus.

It's high time that Nintendo starts thinking outside the box in terms of franchises. Just giving us new ways to interact with the same franchises isn't enticing to anyone except core fans.

Unless they don't start improving their horrendous online structure in meaningfull ways I also doubt that we'll see any increased goodwill towards Digital Business.

They absolutely need:

-unified accounts with unified payment options
-browser based purchases
-adaptive pricing
-Inviting online infrastructure that doesn't treat you like a convict
 

bigtroyjon

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They've got $20b sitting in the bank. They'll be relevant for a while.
nowhere close to $20 billion in the bank. Entire company is worth less than 20 billion.

Nintendo will be around for a while, their current upper management on the other hand probably doesn't have that long if they continue to post worse than expected results quarter after quarter and year after year.
 

Mpl90

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Still minor losses but still healthy. Sequels like Pokémon B&W2 and NSMB2 didn't really proved to do well, hopefully they will not keep this style any longer for Wii U games.

Next quarter will be the real thing, Wii U sales and holiday period.
Err...B&W2 Western sales shouldn't be counted considering the game released here just two weeks ago and the results are up to 30th September. And about NSMB2...isn't a bit premature saing that after two months in Japan and, especially, one month and an half in the West?

EDIT: Tomorrow briefing, which it shouldn't have happened according to Pachter ( it needs to be remembered) will be very interesting because

1) Their software forecasts include digital versions of retail titles. So, maybe we'll have an update about how titles like Mario and Brain Training are doing
2) NUMBERS! From Europe especially.
 
Feb 21, 2007
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There is a much larger problem with the 3DS in the west than marketing. Shrinking market, coupled with a very high price compared to the things that are shrinking said market, and a lack of software are the problems.
Well somehow in Japan they were able to hold on to the market they gained during the DS generation, while in America it seems that generation has moved on to ios gaming for good. What happened there?
 
Jul 15, 2004
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Or maybe having a dead home platform while manufacturing Wii Us that you can't sell is not a good strategy.
I honestly think that they're at least half a year to a year late with Wii U -- a year or so with a dead Wii (software-wise), and killing off the DS with a successor that they initially priced too high -- in hindsight, you can make the case that they could have done better. Hindsight is always 20:20 I suppose.

The gulf between the last great Wii release and Wii U may cause some kind of pent-up demand though, and the timing in the 360/PS3 lifecycle could be of benefit too - maybe there's a lot of people there looking for a new toy too.
 

Shiggy

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I'm actually surprised that NoJ allowed NoA to work on Nintendo TVii and incorporate that into the Wii U. Hopefully they let NoA at least try to work on the online a little.
That should be Nintendo Technology Development though. Also, NST worked on the Nintendo 3DS SDK - so not that surprising.


yeah, nintendo got kinda complacent in the handheld market and put all their focus on the console market, running under the assumption the 3ds would be an automatic hit.
I cannot see any real focus with Nintendo at the moment. I assumed they would announce some new games this year for both 3DS and Wii U, but they seem to focus on easy and cheap sequels like Nintendogs, Animal Crossing, NSMB Wii U, etc. Where's the Nintendo that brought us games like Hotel Dusk, Ouendan, Jam with the Band, or something like The Last Story?
 

Panajev2001a

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And nothing to do with the currency loses and the fact their home console revenue is currently significantly reduced? Right, it's the games and online.
Well, it is not like Wii, like the GameCube, just has to receive very reduced software support for Nintendo when they switched to "next-generation" mode. With a better online approach and more games released when their previous platform is still sold at retail might help retaining users and maybe even gain new ones if you play your cards with cost reductions (manufacturing and thus retail cost ones) right.
 

Panajev2001a

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Yeah, the slow 3DS sales and especially their abysmal performance with titles like Nintendogs, Brain Training etc shows that those were one trick ponies.

Similarly I don't expect Wii Fit U to be anywhere near as successfull as Wii Fit and Plus.

It's high time that Nintendo starts thinking outside the box in terms of franchises. Just giving us new ways to interact with the same franchises isn't enticing to anyone except core fans.

Unless they don't start improving their horrendous online structure in meaningfull ways I also doubt that we'll see any increased goodwill towards Digital Business.

They absolutely need:

-unified accounts with unified payment options
-browser based purchases
-adaptive pricing
-Inviting online infrastructure that doesn't treat you like a convict
I'd also say that you should add:

- games tied to the account and not the hardware
- cheaper games on the eShop than at retail... at least to the level that Sony does on PSN.
 

IrishNinja

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5.5 million WU's by march...obviously we can't say much solid till the launch & subsequent holiday, but how ya'll feel about that target?

I'd also say that you should add:

- games tied to the account and not the hardware
- cheaper games on the eShop than at retail... at least to the level that Sony does on PSN.
first one should be a no-brainer (i'm still operating under the assumption 3DS will get this patched in after WU/NN is up and running, the latter...id love to see nintendo, sony, any of them go up against retail, and it's obvious they're making strides in DD for this new system, but on the other hand, they all seem scared to death to burn any retail goodwill. it's kind've a stalemate waiting to see who'll take them on first, even by something like $10 off regularly.
god, this is so much easier on steam.
 

Drkirby

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Iwata must be getting a lot of heat from investors, but loosing money due to having to produce Wii U units is at least not a bad excuse.
 

metalslimer

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5.5 million WU's by march...obviously we can't say much solid till the launch & subsequent holiday, but how ya'll feel about that target?
That it's a conservative estimate launching in a holiday season and that's probably about how many they plan to manufacture.

Well somehow in Japan they were able to hold on to the market they gained during the DS generation, while in America it seems that generation has moved on to ios gaming for good. What happened there?
Handhelds have taken over Japan as the primary gaming platform. And mobile gaming has been a thing in Japan for much longer so iOS isn't nearly as big of a threat. The 3DS lineup in Japan has a constant flow of big games while the US release schedule has been semi barren. There needs to be some kind of management shakeup at Nintendo because they seem to think they can just coast and nothing bad will happen.
 

Kazerei

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5.5 million WU's by march...obviously we can't say much solid till the launch & subsequent holiday, but how ya'll feel about that target?
Seems fair. The Wii was severely undershipped at 5.84M. So Nintendo's not expecting the Wii U to catch on fire, but it should still put up good numbers.
 

speedpop

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nowhere close to $20 billion in the bank. Entire company is worth less than 20 billion.

Nintendo will be around for a while, their current upper management on the other hand probably doesn't have that long if they continue to post worse than expected results quarter after quarter and year after year.
Well this is their second year(?) of posting losses. They have had a huge R&D budget over the past 3-4 years that everyone seemingly continued to ignore outside of "well yeah, a new console and handheld will do that." They've launched a new handheld with 3D as a hallmark selling point, and the Wii U is around the corner on a worldwide launch and it has a controller with a built-in a touch screen.

The losses seem understandable when you stand back and look at it in perspective. Let's not forget the losses Sony and Microsoft maintained throughout past decade. Whether they want to recycle the hierarchy or not is up to the salivation skills of shareholders, but I doubt anything serious is about to come to pass outside of yearly losses for 5 years straight.
 
Jul 15, 2004
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Yeah, the slow 3DS sales and especially their abysmal performance with titles like Nintendogs, Brain Training etc shows that those were one trick ponies.

Similarly I don't expect Wii Fit U to be anywhere near as successfull as Wii Fit and Plus.

It's high time that Nintendo starts thinking outside the box in terms of franchises. Just giving us new ways to interact with the same franchises isn't enticing to anyone except core fans.
I always felt that Nintendogs would be a 'bubble' of sorts - its like the new Tamagotchi or Furby or something. Brain Training on the other hand will still have a lot of fans I feel, the next real game in the franchise isn't out in NA until December, and it still doesn't have a date for Europe. Definitely worth making both games for 3DS anyway, as I'm sure the ROI is probably pretty good.

Its easy to forget that these franchises are only a generation old and their first entries did extremely well. Nintendo would be mad if they didn't attempt sequels or successors to them.

Art Academy on 3DS is incredible, and I know for sure that I can't wait for Fallblox...

I agree with your recommendations re: services, but I have no problem with their game output at the moment.
 

AniHawk

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Well somehow in Japan they were able to hold on to the market they gained during the DS generation, while in America it seems that generation has moved on to ios gaming for good. What happened there?
i think nintendo made the mistake of trying to make an iphone out of the 3ds. the ds did well despite not having the same features the psp had, and it did well despite being weird, outdated technology. it just had the games people wanted, and they were affordable.

the things in common all nintendo handhelds had up until the 3ds was: portability (general size), price (affordable software and hardware), accessibility (in terms of controls and games), and battery life.

the 3ds is a $170-$200 machine that was $250 at launch. it had weird screen issues and loose hinges. the battery life was short, and didn't make it a good portable. the games for the machine came from other systems until christmas, and even after that, there was nothing on the machine but a bunch of console-lite titles.

to top it off, the games are not affordable, even compared to their previous software.

the price needs to come down in general. a $99.99 3ds with $20-$30 would be a much bigger hit in the united states, but the system also needs its reason to live like tetris and pokemon did for the game boy, or nintendogs and brain age did for the ds.