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Nintendo Cuts Profit Forecast 70Pct Ahead of Wii U Release

Nintendo said that it now expects a net profit of about $75.2 million for this fiscal year (which ends in march 2013), up from a $350.8 million loss in fiscal 2011. However, the new forecast is down from an original forecast of a profit of $250.5 million for the year.

The reduction is mainly due to a lowered shipment volume for the 3DS from 18.5 to 17.5 million units. Nintendo said it shipped more than 5 million 3DS devices in the second and third calendar quarter of this year. The Wii continues to decline much faster than originally planned as the company sold only 1.3 million consoles in Q2 and Q3, which was blamed on a lack of compelling game releases. For the full year, Nintendo now expects the Wii to sell only 5 million units, down from a forecast of 10.5 million half a year ago.

The savior might be the Wii U, which company believes will sell 5.5 million units until the end of March. The company indicated that the console is aggressively priced and will sell at a loss for Nintendo initially. The profits are therefore mainly in software sales: Nintendo believes it can sell every Wii U customer about four games - or 24 million copies in total. Given its history, this is a rather optimistic goal and will depend on a strong third-party lineup for the Wii U ecosystem. There is not much room for failure.

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