Slow GCN Sales and DS Price cuts affect the Big N's Bottom Line

[Lkr]

Slow GCN sales and DS price cuts affect the Big N's bottom line.

October 7, 2005 - Nintendo has cut its first-half operating profit forecast by one third due primarily to slow sales of GameCube hardware and software in North America. The company also said that recent price cuts for the Nintendo DS, as well as the cost of developing its next-generation console -- known so far as Revolution -- also affected earnings.

In August, Nintendo dropped the price of the DS from $149 to $129 in the US, and from €149 to €129 in Europe. The company is also preparing its Revolution project to launch next year, when it will join Microsoft's Xbox 360 and Sony's PlayStation 3 as the new breed of gaming consoles.

Nintendo now expects to book a group operating profit of 20 billion yen for the six months ended September 30, compared to its prior estimate of 30 billion yen. The company dropped its first-half sales estimate to 175 billion yen, down 8 percent.

Due to fluctuations in the value of the dollar, however, Nintendo is revising its first-half net profit estimate to 36 billion yen instead of the previously forecast 19 billion yen.

Reuters quoted Nintendo senior managing director Yoshihiro Mori, who spoke at a news conference in Osaka. "The big drop for GameCube games was in North America," Mori said. "It looks like the [GameCube's] life is nearing its end."

Source: DS @ IGN