Videogame giant Nintendo Co. said Thursday it sank into the red for the three months ended June as the yen's recent strength ate into profits and as it cut the price of its popular DS handheld console.
The maker of the hit series "Super Mario Bros" said it suffered a net loss of 25.2 billion yen (288 million dollars) for the first quarter, compared with a net profit of 42.3 billion yen a year earlier.
"Appreciation of the yen and the lowering of the price of Nintendo DS hardware in Japan and in Europe adversely impacted net sales and operating income," Nintendo said in a statement.
The results illustrate that the strength of the yen is weighing on Japanese exporters, eroding overseas profits and mitigating a recovery in consumer demand.
Foreign exchange losses came to 70.5 billion yen for the quarter, said Nintendo, whose sales outside of Japan make up 87 percent of its total.
The Kyoto-based company also said that lowering prices of its hardware amid a sales slowdown was pressuring its net sales and operating income.
Last month, Nintendo slashed the price of its portable DS game consoles by 20 percent in Japan for the first time in an effort to revive flagging demand for its products.
Operating profit plunged 42.2 percent to 23.3 billion for the three months, while revenue dropped 25.6 percent to 188.6 billion.
However, for the full fiscal year through March, Nintendo maintained a net profit forecast of 200 billion and an operating profit of 320 billion yen on revenue of 1.4 trillion yen.
Nintendo sold 3.04 million Wii machines worldwide for the quarter, up from 2.23 million units a year earlier, as sales in America more than doubled to 1.8 million units.
Nintendo released a total of 112 software titles for the Wii worldwide during the quarter, including "Super Mario Galaxy2" and "New Super Mario Bros Wii."
But the company's Nintendo DS handheld game device sold 3.15 million units, down from 5.97 million for the same period last year. "Fewer new software titles contributed to driving hardware sales," Nintendo said.
Analysts say that as the impact of machines such as the DS and Wii eventually fade within a saturated market, Nintendo's next move will determine whether it still has the ability to lead the industry.
At the Electronic Entertainment Expo last month, Nintendo unveiled a new generation DS handheld videogame system that lets people play in 3D without using special glasses.
Sluggish earnings earlier in the fiscal year wouldn't surprise investors much, said Tokai Tokyo Research Center analyst Yusuke Tsunoda.
"Investors are now waiting for the 3DS to come out to see how much boost Nintendo can get from it," he told Dow Jones Newswires.
Copyright 2010 AFP Asian Edition
