Nintendo Operating Income Shortfalls, Leadership Changes, And Wii U Sales Numbers Disclosed

by Mike Futter on Apr 24, 2013 at 04:00 AM

This morning brought expected news from Nintendo of continued financial shortfalls. Earlier this week, we reported analyst predictions of operating income losses amounting to 18.7 billion yen. As it turns out, these estimates were conservative.

Actual operating income shortfalls amounted to 36.4 billion yen ($365 million), which is only slightly better than fiscal year 2012. Nintendo has pinned the loss on missed sales projections for the Wii U, which sold 3.45 million units worldwide (and only approximately 400,000 consoles in the last quarter). By comparison, the Nintendo Wii sold approximately 5.8 million units between November 2006 and March 31, 2007 (the same relative period of that hardware's life cycle).

The 3DS, which is largely regarded as successful, saw lower than anticipated movement with 13.95 million units. In January, Nintendo lowered projections for both consoles to 4 million units for the Wii U and 15 million units for the 3DS.

Nintendo's net income was positive for 2013, improving from a shortfall of 43 billion yen ($430 million) to a surplus of 7 billion yen ($70 million). The improvement is due in large part to favorable currency exchange rates. Operating income remains a better indication of performance, especially as global president Satoru Iwata has made a personal guarantee to improve that measure to a positive 100 billion yen ($1 billion) by March 31, 2014.

The financial news comes with word of leadership changes at Nintendo. Iwata has assumed the role of CEO of Nintendo of America, in addition to his other responsibilities. He replaces Tatsumi Kimishima who was promoted to managing director of parent Nintendo Company, Ltd. Kimishima replaces two retiring company officials. Reggie Fils-Aime remains president and chief operating officer of Nintendo of America.

Whether the added responsibilities for Iwata will further his mission to drastically turn around his company's financial performance or serve as a distraction remains to be seen. What is clear is that the Wii U has been a significant failure so far for Nintendo due to poor communication of the system's benefits.

Low sales have lead to an early drop off of third-party support, even from Ubisoft, who was one of the biggest supporters of Nintendo's latest system prior to launch. Nintendo has yet to ramp up significant first-party titles, and with EA pulling nearly all support, the house of Mario has an enormous mountain to climb in order to reach Iwata's self-imposed 100 billion yen summit.   

[Source: Nintendo (1), (2), (3), (4)]