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[Captain Smoker]

Yeah well it's kind of captain obvious as far as operating income goes. Maybe it's because they never had as bad of a quarter as Q4 is shaping up to be (sales-wise), but 35 billion yen on operating income (which is simply what says there, profits-costs, it does not really explain much) sounds huge. And currency gains/losses and deferred tax have no impact on operating cost.

Was mostly referring to your line about share buyback though.

We'll see, their last Q4s had similair results.

Q4 FY3-2011: + 12.281.000.000 Yen
Q4 FY3-2012: - 20.912.000.000 Yen
Q4 FY3-2013: - 30.553.000.000 Yen
Q4 FY3-2014: - 33.422.000.000 Yen (projection)


Low hardware sales, Wii U still sold at loss, G&A-expenses (what exactly belongs to this segment anyway?), etc.

 

[jcm]

Looking at the TTM this quarter, 3DS was basically flat for hardware, but software improved. I suppose that's the Pokemon effect. Here's the comparison to NDS.

This quarter
TTM after 12 quarters on sale:

3DS Hardware:  12.89
NDS Hardware:  26.83

3DS Software:  67.30*
NDS Software: 155.89**


Last Quarter
TTM after 11 quarters on sale:

3DS Hardware:  12.78
NDS Hardware:  26.00


3DS Software:  57.96*
NDS Software: 139.46**

* Software sales units and the number of new titles for Nintendo 3DS 
are those of Nintendo 3DS card software (packaged and downloadable versions).
** This does not include DSiWare

 

[zomgbbqftw]

The net loss is being projected because Nintendo are reversing some DTAs accumulated in the US because of poor profitability and they expect the yen to strengthen by the end of the financial year, wiping out some of their FX gain.

 

[Captain Smoker]

The net loss is being projected because Nintendo are reversing some DTAs accumulated in the US because of poor profitability and they expect the yen to strengthen by the end of the financial year, wiping out some of their FX gain.

By the way, could you explain what falls into the "General & Administrative expenses" section?

 

[Final Boss]

no SW update

Wii u will never do GameCube numbers, wow

 

[kunluncat]

Dose anyone knows the attach rate of vita. It will be interesting to compare with 3DS.

 

[zomgbbqftw]

By the way, could you explain what falls into the "General & Administrative expenses" section?

Exactly that. Costs associated with running the company, employees basically.

 

[CassSept]

We'll see, their last Q4s had similair results.

Q4 FY3-2011: + 12.281.000.000 Yen
Q4 FY3-2012: - 20.912.000.000 Yen
Q4 FY3-2013: - 30.553.000.000 Yen
Q4 FY3-2014: - 33.422.000.000 Yen (projection)


Low hardware sales, Wii U still sold at loss, G&A-expenses (what exactly belongs to this segment anyway?), etc.

What's pretty scary is that Nintendo usually misses their forecasts and it's already obvious they won't meet sales forecasts for the coming quarter either. I guess I remembered the situation somewhat differently, my bad. Still, as far as operating costs go these past 2 years make sense. Since last year profit margins on 3DS probably improved, which I thought should lead to easing at least some of the strain WiiU has on the company, but it seems it's a different story here. I'm no analyst, but that's... really bad.

G&A expenses are mostly administrative stuff like executive branch salaries, rents, depreciation (as far as office space is considered), but also some of the more minor stuff, like office supplies or subscriptions, that sort of things. Basically any cost that is connected to administrating the company.

 

[redmetal86]

Anyone have CNN International? Stephen Totillo talking about Nintendo's financial troubles now.

 

[tba]

and they expect the yen to strengthen by the end of the financial year, wiping out some of their FX gain.

I may be wrong but if looks like after the latest revision of the forecast we could expect more foreign exchange gains since Nintendo expects yen to continue to fall.

Foreign currency assumptions for the end of the fiscal year have been revised from 90 yen to 100 yen per U.S. dollar and from 120 yen to 140 yen per euro.
http://www.nintendo.co.jp/ir/en/library/earnings/140117/index.html

 

[TheGreatMightyPoo]

Anyone have CNN International? Stephen Totillo talking about Nintendo's financial troubles now.

Wish I could watch that, dog.

 

[Tobor]

Well, the 2DS is certainly a flop. It's whole reason for existing is to spike sales in the west with a lower price point. Sales are still down.

 

[Nikodemos]

Well, the 2DS is certainly a flop. It's whole reason for existing is to spike sales in the west with a lower price point. Sales are still down.

Unless they do something about software prices, they'll keep being down.

 

[zomgbbqftw]

I may be wrong but if looks like after the latest revision of the forecast we could expect more foreign exchange gains since Nintendo expects yen to continue to fall.

Foreign currency assumptions for the end of the fiscal year have been revised from 90 yen to 100 yen per U.S. dollar and from 120 yen to 140 yen per euro.
http://www.nintendo.co.jp/ir/en/library/earnings/140117/index.html

From today's release:

"Also, we expect the yen to rise from the end of the third quarter to the end of the fiscal year, reducing exchange gains and ordinary income"

http://www.nintendo.co.jp/ir//pdf/2014/140129e.pdf

 

[Basileus777]

Well, the 2DS is certainly a flop. It's whole reason for existing is to spike sales in the west with a lower price point. Sales are still down.

I just wonder how much effect it had on Nintendo's margins.

 

[nampad]

So 400k to go to reach the forecast. Shipment and sell through should be quite close in America (870k shipped to NA, ~750k sold in USA) but Japan got more units on the shelves now (600k shipped, ~446k sold). The recent japanese numbers also don't indicate a good new baseline for the Wii U.
Guess they are counting on Mario kart 8 to pull some numbers.

Also shocking numbers for Europe+other regions.

 

[tba]

From today's release:

"Also, we expect the yen to rise from the end of the third quarter to the end of the fiscal year, reducing exchange gains and ordinary income"

http://www.nintendo.co.jp/ir//pdf/2014/140129e.pdf

Thanks for the link, indeed they currently use 105/145 so 100/140 will lead to the FX losses.

 

[ultratruman]

I wish the WiiU was like the gamecube it underperformed and sold way less than the ps2 but it didn't matter cuz i was having an awesome time with all the great games Nintendo and third parties put out that's my biggest disappointment with WiiU Nintendo's output has been abysmal

The Wii U is there first HD console, glacial output was inevitable for a company so deaf to developers. See: the PS3.

 

[CassSept]

From today's release:

"Also, we expect the yen to rise from the end of the third quarter to the end of the fiscal year, reducing exchange gains and ordinary income"

http://www.nintendo.co.jp/ir//pdf/2014/140129e.pdf

With further FX losses and DTA reversal (they really believed in a turnaround huh) how low do you think their net income can go this year? Do you think net income could possibly dip further than it did 2 years ago?

 

[Plinko]

Unless they do something about software prices, they'll keep being down.

Bingo.

$40 is way too much for most handheld games these days.

 

[Frankfurter]

So 400k to go to reach the forecast. Shipment and sell through should be quite close in America (870k shipped to NA, ~750k sold in USA) but Japan got more units on the shelves now (600k shipped, ~446k sold). The recent japanese numbers also don't indicate a good new baseline for the Wii U.
Guess they are counting on Mario kart 8 to pull some numbers.

Also shocking numbers for Europe+other regions.

400k really isn't that much. If Wii U shipments were to follow the same trend as for the last quarters, this'd mean approx. 178k for the Americas, i.e. sth. like 50k on average for the US per month (rest Canada, Mexico etc.), 120k for Japan, i.e. sth. like 40k per month (they have already sold through 85k in MC's 2014 year) and ~102k for the RTW.

 

[Asd202]

3DS attach rate is terrible...

 

[Kazuma Kiryu]

Numbers as expected. 3DS did well but still declining every year, and will continue declining, and the WiiU is about as relevant as the Vita.
Very interested to hear what Iwata will say.

 

[gigantor21]

How is there not like a "player's choice" line of ds/3ds/wii/wii u games?

I know there was like what, six wii games that got a Player's Choice version, but come on. There should be a good number of games sitting on shelves for $20.

This, seriously. There's no good reason that games from 2011 should still be selling at or near full price. Something like that should've been done a while ago.

 

[ultratruman]

Get this kid to Kyoto

 

[Haines]

Hate to spay this but as much as I love Nintendo and both it's hardware right now I'm glad they aren't selling so that they get some of their shit in gear instead of being so complacent.

I look forward to a new Nintendo

 

[Captain Smoker]

3DS attach rate is terrible...

+ Handhelds have a traditional low Tie Ratio
+ Tie Ratio doesn't include digital only downloads and revenues generated there, which should be quite good considering that Nintendo already generated 180.000.000 $ this fiscal year (but it also includes Wii U)

- Well, it's still worse than it's predecessor(s)

 

[MikeE21286]

Wii u will never do GameCube numbers, wow

It's only continuing the downward trend since the SNES.

Wii was an aberation/outlier

 

[TheSpaceBetween]

Damn, I didn't know the GC had the best attach rate of any Nintendo system including handhelds. What an awesome system.

 

[Tripon]

It's only continuing the downward trend since the SNES.

Wii was an aberation/outlier

Yeah, just totally ignore the one thing that makes your analysis untrue.

 

[Keyouta]

Yeah, Nintendo has to get out of the home console market and focus on a hybrid device. Their blue ocean market that bought the accessible games for the DS and Wii have moved onto the much easier-to-use smartphones and tablets.

Iwata even said years ago that if the Wii didn't exceed the Gamecube it would be a failure.

Very interested to see what their Investor's Meeting will bring, especially at the Q&A.

 

[Ninja Scooter]

Yeah, just totally ignore the one thing that makes your analysis untrue.

The analysis isn't untrue. The Wii market was not sustainable. Nintendo did not create a loyal consumer base the way, say, apple did with the iPhone. It was an outlier and the Wii U is what happens when Nintendo loses that casual market.

 

[Spieler Eins]

I don't see how the 3DS is not here to stay for another 3 years minimum. Even if it's sinking YoY, at least they have something to sell software on and what could they do with a 3DS successor anyway - it would just continue shrinking the user base (and they won't go to cellphone games). Not to mention that Gamefreak won't let this generation end until another batch of Pokemon is out.
The successor to the WiiU or something similar in a ,,third pillar'' disguise is gonna come sooner than the 3DS is gonna leave. But the 3DS needs a real revision though, not that 2DS junk.

 

[Goldenmoney]

Pokemon numbers look really damn good. Are there any comparison charts or numbers for X/Y with previous pokemon titles?

 

[CassSept]

Pokemon numbers look really damn good. Are there any comparison charts or numbers for X/Y with previous pokemon titles?

They're pretty much incomparable since this was the first worldwide simultaneous release (unlike previous installments which were released with at least half a year of delay overseas), but...

Figured I'd post a Pokémon comparison, since there was some question as to how it is "in decline" here the other day

X & Y: Two months & two weeks on sale in all regions - October 12th 2013 - December 31st 2013
11.61 million

Black & White: Just over six months on sale in Japan, just under one in the west - September 10th 2010 - March 31st 2011
11.51 million

Black & White: Just over nine months on sale in Japan, just under four in the west - September 10th 2010 - June 30th 2011
12.87 million

the outlook's pretty good.

 

[Calamari41]

I don't see how the 3DS is not here to stay for another 3 years minimum. Even if it's sinking YoY, at least they have something to sell software on and what could they do with a 3DS successor anyway - it would just continue shrinking the user base (and they won't go to cellphone games). Not to mention that Gamefreak won't let this generation end until another batch of Pokemon is out.
The successor to the WiiU or something similar in a ,,third pillar'' disguise is gonna come sooner than the 3DS is gonna leave. But the 3DS needs a real revision though, not that 2DS junk.

This is how I see it too. The only reason to release a new handheld any time soon would be to compete with Sony, and they are effectively out of the market. Unless Nintendo has a legitimate "answer" to the mobile gaming problem, they would be much better served sticking with the 3DS and continuing to produce revisions. Don't throw away a 40+ million userbase on a "more of the same, but with more pixels" solution. Their next handheld should be another third pillar type gamble that can be swept under the rug in the event of a failure.

 

[Jonboy]

Little argument needs to be had, and contending/defending the <2 million units shipped/sold a year after launch and during the busiest holiday period constitutes as absolute madness at this point. Nintendo's hardware relevancy in the home console space has diminished significantly, and anybody with an interest or emotional investment in the entertainment they provide should have their fingers and toes crossed that the company intends to implement significant, company wide changes that steer development collectively towards a more positive, progressive, and profitable future.

Looking forward to tomorrow.

Exactly.

 

[Goldenmoney]

They're pretty much incomparable since this was the first worldwide simultaneous release (unlike previous installments which were released with at least half a year of delay overseas), but...



the outlook's pretty good.

Thanks! Good numbers indeed.

 

[LegendofLex]

It's only continuing the downward trend since the SNES.

Wii was an aberation/outlier

For Wii to be an aberration, it would have to have not been consistent with the DS.

 

[liger05]

This is how I see it too. The only reason to release a new handheld any time soon would be to compete with Sony, and they are effectively out of the market. Unless Nintendo has a legitimate "answer" to the mobile gaming problem, they would be much better served sticking with the 3DS and continuing to produce revisions. Don't throw away a 40+ million userbase on a "more of the same, but with more pixels" solution. Their next handheld should be another third pillar type gamble that can be swept under the rug in the event of a failure.

Good point.

 

[prag16]

Shipped, if that isn't obvious. So ~2M in warehouses and on shelves?

2 MILLION units in the channel?? Citation needed... Because that sounds way too high.

Last year this time there was talk on here of 1 million in the channel, which was still probably too high an estimate...

 

[Lunar15]

Little argument needs to be had, and contending/defending the <2 million units shipped/sold a year after launch and during the busiest holiday period constitutes as absolute madness at this point. Nintendo's hardware relevancy in the home console space has diminished significantly, and anybody with an interest or emotional investment in the entertainment they provide should have their fingers and toes crossed that the company intends to implement significant, company wide changes that steer development collectively towards a more positive, progressive, and profitable future.

Looking forward to tomorrow.

While I completely agree with this statement, there's the lingering fear that the entertainment I enjoy is becoming increasingly unprofitable and that the business models employed by the companies whose work I have loved is no longer sustainable. And this goes for far more than Nintendo.

Japan's businesses thrived due to a beneficial dollar to yen ratio that hit its peak in the 90's and early 2000's. These companies could take risks because they could make a decent profit selling just about anything abroad. It all began to decline when the fiat bubble finally burst in 2008, and now it's clear that most japanese gaming companies are woefully under equipped for the global market and are suffering losses across the board. Those that failed to globalize management in some part, like say, Son y(although they have more than enough financial problems of their own to worry about), now face a market that has completely left them behind.

It's an issue of wondering whether greater forces than just individual business decisions have more sway over the long term viability of game industry as it was. Shit changes, markets turn. I don't fear change, but I do fear that my tastes are no longer in the target of where the industry is going.

(Disclaimer: I'm hugely generalizing all of the myriad of market factors at play here. There are countless reasons why the Japanese gaming industry is hurting, but I'm pointing out the ones that are major)

 

[Koppai]

Bingo.

$40 is way too much for most handheld games these days.

I don't think the prices are too bad for what they offer, but it's not even that. Western games are now in control and that is what the consumer wants. Nintendo doesn't offer shooters or sports games in their repertoire so people skip it. It's all about the software man...

Nintendo released Mario 3D Land and Mario Kart 7 a month apart to help boost sales of 3DS and it worked for them. This time they didn't even bother with that one-two punch for Wii U. I bet Mario Kart 8 being out by Christmas last year probably would've had a lot bigger effect then whenever it gets released this year.

 

[LordOcidax]

Today the stocks of Nintendo are up around 8%. (Around UP $1.23). How this can be possible? Shareholders are happy or what?...

 

[TheGreatMightyPoo]

Today the stocks of Nintendo are up around 8%. (Around UP $1.23). How this can be possible? Shareholders are happy or what?...

Aonuma showed them Zelda :O

 

[PhoenixDawn]

Today the stocks of Nintendo are up around 8%. (Around UP $1.23). How this can be possible? Shareholders are happy or what?...

Probably people taking advantage of the recent big drops in the price to buy before this investors meeting/possible direct so they can take advantage of any spikes to get short term profit.

 

[Marsyas]

Today the stocks of Nintendo are up around 8%. (Around UP $1.23). How this can be possible? Shareholders are happy or what?...

Nintendo announced a massive share buyback.

 

[LordOcidax]

Probably people taking advantage of the recent big drops in the price to buy before this investors meeting/possible direct so they can take advantage of any spikes to get short term profit.

Ok.Ok. It looks like Nintendo is going to obtain 10 million of his own shares. Maybe this has to do something with this peak. Interesting move.

http://www.nintendo.co.jp/ir/pdf/2014/140129_3e.pdf

 

[Guevara]

Tie Ratios:

Year Released (US)	Platform	Hardware	Software	Type		Tie-Ratio
1985			NES		61.91		500.01		Console		8.08
1991			SNES		49.1		379.06		Console		7.72
1996			N64		32.93		224.97		Console		6.83
2001			GC		21.74		208.57		Console		9.59
2006			Wii		100.9		892.34		Console		8.84
2012			Wii U		5.86		29.37		Console		5.01

Year Released (US)	Platform	Hardware	Software	Type		Tie-Ratio
1989			GB		118.69		501.11		Handheld	4.22
2001			GBA		81.51		377.42		Handheld	4.63
2004			DS		153.98		942.32		Handheld	6.12
2011			3DS		42.74		152.29		Handheld	3.56

 

[BY2K]

WWHD made a million?

Can we get other HD ports now, please?