Nintendo has forecasted this morning their profit will be falling 34% in this fiscal year due to the dollar's decline against the yen, and saw their stock slide 10% on their recent earnings announcement — the most it has in 3½ years.
However, this does not mean Nintendo's in dire straits by any measure. Operating profit — the measure of sales minus the cost of goods — is expected to rise 22%.
Bloomberg has comment from Hiroshi Kamide of KBC Securities in Tokyo on the issue. "There is always a bit of a psychological issue with the foreign exchange gains or losses. I wouldn't say their business model is getting weaker or their positioning in the market is getting worse. I think things are going to get better." Kamide has a "buy" rating on Nintendo.
Nintendo revealed it is counting on its upcoming Wii home console, with its lower price and unique controller, to draw buyers away from Sony's PlayStation 3 and Microsoft's Xbox 360. The company said it would charge no more than 25,000 yen for the system in Japan, which works out to about US$223. US launch price will be under $250, and the company plans to ship 6 million systems to retailers worldwide by the end of its 2006 fiscal year on March 31, 2007.
Nintendo also said it will increase its R&D spending from 30 billion yen to 32 billion yen, and that it will be investing 25% more in capital costs, including manufacturing facilities for Wii. The company also expects to ship 16 million Nintendo DS systems (up from last year's 11.5 million) and 2.5 Game Boy Advance systems this year.