Nintendo posts abysmal earnings; trouble afoot?

The company's financials have declined considerably in 2010, according to its latest release. Not only are revenues way down, but profit has plummeted 74 percent year over year.

Don Reisinger
Former CNET contributor Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.
Don Reisinger
2 min read
Daniel Terdiman/CNET

As sales of the Wii and DS declined in 2010, Nintendo saw its financial performance slide with them.

The company today reported (PDF) that during the nine-month period ended on December 31, 2010, it generated nearly 808 billion yen (about $9.8 billion), representing a steep 31.7 percent decline from the 1.18 trillion yen it posted during the same period in 2009. Nintendo said that it tallied 49.6 billion yen in profit during the nine-month period. That figure is down a whopping 74.3 percent compared to the 192.6 billion yen it tallied in 2009.

Nintendo said its declining revenue and profits were due to "slower sales and appreciation of the yen."

During the nine-month period ended December 31, Nintendo sold 15.7 million DS units, with about half of those sold in the U.S. The company sold 13.7 million Wii units worldwide during the period. In the nine months of 2009, it sold 23 million DS units and 17 million Wii units around the globe.

But even with those issues, Nintendo isn't changing its strategy of "gaming population expansion," the company said in its earnings release. It said that it wants to continue to offer "compelling products that anyone can enjoy, regardless of age, gender, or gaming experience."

Looking ahead, Nintendo isn't expecting all that much from its business for the full fiscal year, which ends March 31. The company said that it expects its revenue to be down 23.3 percent year over year and its profits to slide by 60.6 percent. The company was also forced to reduce its sales forecast for the DS down 1 million units to 18.5 million units for the fiscal year. However, including the Nintendo 3DS in total unit sales--it hits store shelves in Japan in February, and in Europe and the U.S. in March--will push that number up to 22.5 million.

Nintendo said that it has also revised Wii sales downward by 1.5 million units to 16 million units sold in the fiscal year. However, it expects Wii software sales to be up 32 million units over original estimates to 170 million unit sales.

Nintendo's latest showing continues a spate of disappointing news for the company. Last year, Nintendo reported a $24.6 million loss in the six-month period ended September 30. Nintendo also announced that it sold 7 million Wii units in the U.S. in 2010, representing a steep decline from the 10 million it sold in 2008 and about 9.5 million units it sold in 2009.