Nintendo makes drastic cut to forecast

The Japanese games company Nintendo has predicted it will post an operating loss for its financial year due to lower-than-expected sales.

In a statement released Wednesday (PDF), Nintendo said it expected operating losses of 20 billion yen (US$220 million) for the year ended March 31, 2013, significantly down from its previous estimate of 20 billion yen in operating profit. The figure was also more drastic than market estimates of 12.1 billion yen (US$134 million) in profit, according to a Reuters poll of 19 analysts.

However, Nintendo raised its net profit forecast for its next financial year to 8 billion yen (US$88 million), up from 6 billion yen (US$66 million).

Nintendo said the earnings forecast was modified to reflect a weaker Japanese yen as well as lower-than-expected sales outlook based on the sales performance during the year-end sales season and afterward.

In the Reuters report, Nintendo president Satoru Iwata said: "The sales of Wii U were smooth at the beginning, but since the turn of the year they have been losing momentum.

"Due to delays in software development, we had to postpone sales of software products we had planned to [release] early this year, which is interrupting our sales," Iwata said.

In a ZDNet report in September, market watchers noted that the overall game console market in Asia had been challenged by the rise of online and mobile games, especially when console devices had created a high entry barrier for consumers.