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Nintendo's huge losses continue; when will the bleeding stop?

The game company loses nearly $625 million during the nine months ended December 31. Looking ahead, its forecast has been revised down with deeper losses.

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
3 min read
The Wii is becoming a financial drain for Nintendo.
The Wii is becoming a financial drain for Nintendo. Nintendo

Nintendo's troubles are deepening, and unfortunately for the venerable game company, there doesn't appear to be an end in sight.

The game company today announced (PDF) sales of 556.2 billion yen ($7.2 billion) during the nine months ended December 31, down nearly 32 percent compared to the same period in 2010. It also posted a 48.4 billion yen (about $625 million) net loss. During the same period in 2010, Nintendo generated a profit of nearly 50 billion yen.

In its earnings release, Nintendo acknowledged that times are tough, saying that its financials were brought down by sluggish Nintendo 3DS sales during the first half of its fiscal year, as well as a strong yen. The company also cited its "significant" Nintendo 3DS price cut, from $249 to $169, as a major drain on revenue.

But Nintendo's attempt to put a semi-good face on its earnings were overshadowed by its exceedingly poor unit sales data. The company said it sold just under 9 million Wii units worldwide between April and December of last year, down significantly from the 13.7 million units it sold in the preceding year. And as the Nintendo DS has been overshadowed by the 3DS portable, its sales plummeted from 15 million in 2010 to just 4.6 million last year.

Software is another major issue for Nintendo. The company's Wii software unit sales dropped to 89 million worldwide last year, down from the 150 million units it sold in 2010.

The single silver lining during the nine-month period was 3DS sales. After getting off to a rough start, the portable was able to tally 11.4 million worldwide unit sales during the period. Nintendo said earlier this month that the 3DS' strong sales outpaced the Wii's during its first nine months of American store shelves.

As long as the 3DS continues to sell well, Nintendo will have at least one device it can rely on through 2012. By the end of the year, it might just have two, since the company confirmed that it will be launching its Wii U console by the end of 2012. Nintendo's console will launch with better graphics than its predecessor, HD support, and perhaps most importantly, a touch screen-equipped controller.

In most cases, new consoles sell quite well in the beginning, as early adopters jump at the chance to get their hands on the latest hardware. So there's a good chance things might turn around a bit for Nintendo toward the end of the year.

Until then, however, Nintendo isn't expecting much good news. The company today announced that it had revised its earnings for the full fiscal year ended March 31. Previously, it hoped to generated 790 billion yen for the period, but has now pushed it to 660 billion yen. Nintendo originally expected to post a 20 billion yen loss, but said today that it now believes it'll lose 65 billion yen on the year.

Last fiscal year, Nintendo posted a profit of 77.6 billion yen