earnings release wrap up for disney nintendo capcom and thq

Earnings Recap: Disney, Nintendo, THQ and Capcom

Seth Gilbert, 07-30-2008

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earnings wrap The monthly NPD reports tend to give a decent macro perspective on the video game industry economy in the U.S. market but there’s nothing like earnings season to unwrap the details. Yesterday, Sony and Electronic Arts opened their books. Sales were up. Today, Nintendo, THQ and Capcom rounded out the story. They and Disney, all reported results. Here’s the earnings wrap up for all four consolidated to a single Metue report:

DISNEY EARNINGS

Disney is the second largest U.S. entertainment company and when it comes to earnings, they’re a beacon that casts light on the entire industry’s status. For the 3rd quarter, Disney delivered solid results ahead of, or in line with, most expectations.

Net income was $1.28b or 66cents a share. Adjusted profits were 62cents. Estimates had called for adjusted income of 60 to 61 cents (depending on which polling service). In the same period last year, Disney had net income of $1.18b or 57 cents a share.

In total revenue, Q3 brought in $9.23b. That bested expectations that called for $9.14b

By division:
Disney’s broadcast group, which is home to ABC, saw operating profits drop 11% to $260m. Cable Networks saw operating income run up 14% to $1.21b on revenue of $2.59b thanks to growth at ESPN and the Disney Channel.

Disney’s film group, buoyed last year by Pirates of the Caribbean: At Worlds End, didn’t’ have a comparable blockbuster this year. As a result, similar to DreamWorks Animation ’s release yesterday, the groups numbers suffer in year to year comparisons. The division saw sales drop 19% to $1.43b. Earnings shrank 49% to $97m.

The success of Pirates of the Caribbean last year also hurt gaming revenues this quarter as there was no comparable brand to drive sales similarly. Still, annual game development expenses are around $200m and expected to rise toward $350m in the coming years.

Overall, the results at Disney were good. The company did, however, acknowledge that the advertising market is weakening.

Accordingly, looking forward, Disney may face some pressure due to the economy but with theme parks showing resolve so far, and only about 20% of revenues derived from advertising (compared to more than 30% at Viacom), the company seems in ok shape to weather any near term turbulence.

More detailed press coverage of Disney’s finances from other sources can be found at:
Yahoo Finance
Google Finance
Marketwatch

NINTENDO EARNINGS

Surprising few but still impressing many, Nintendo continued its strong run. The Wii, The DS portable and their supporting cast of software helped the company report a profit of about $996m (107.27b Yen) for the period from April to June. The increase amounts to a 34% increase over the same period last year.

For the quarter, sales were up 24% to about $3.9b (43.38b Yen).

Since launching the Wii in November 2006, 29.6m Wii’s have been sold worldwide. Nintendo expects to sell 28m for the fiscal year ending in March 2009.

In the portables category, Nintendo has so far sold 77.54m (lifetime) DS units worldwide. They are projecting a tally of 28m for the current fiscal year.

For the current quarter, Nintendo sold 5.2m Wiis worldwide and 6.94m DS units. That is an improvement over 1.7m Wii’s last year but a 40k unit shortfall for the DS. For the current quarter Nintendo also sold 3.4m units of Wii Fit and 6.4m copies of Mario Kart. Software sales for the Wii were up 222% in the Americas and up 40% in Japan.

In the negative column, there has been some persistent concern that the DS platform has started to peak. Home market sales data (Japan) is being cited by some as potential early evidence of that. Notably, for the current quarter, only 580k DS units were sold in Japan. That is down from 2.08m for the same period last year. Software for the portable slowed similarly with quarterly sales of only 4.93m titles compared to 9.74m last year.

Looking ahead, Nintendo is maintaining their prior forecast but with a stronger yen (and weaker dollar) currency issues have the potential to impact global results.

More detailed press coverage of Nintendo’s finances from other sources can be found at:
Yahoo Finance
Google Finance

THQ EARNINGS

For game publisher THQ, which continues to struggle financially, one ongoing story may be that of broader entertainment brand convergence. Along with original titles, the company already has in its lineup titles based on Pixar’s (Disney) WALL-E and a WWE wrestling release. Coming up, thanks to more licensing deals, the pipeline will feature games based on Marvel Entertainment characters, DreamWorks Animation’s 2010 feature release and the Ultimate Fighting Championship. The bet seems to be that these established brands and the joint marketing opportunity will drive sales and help the company turn around earnings weakness.

For Q2, THQ reported a 31.7% rise in year over year revenue. The company took in $137.6m. Net losses, however, also increased. The company reported a loss of $27.2m (41 cents a share) compared to a loss of $9.3m (14cents) last year.

Excluding a 3-cent gain from discontinued operations and the costs for stock-based compensation, deferred revenue, and realignment costs, THQ posted an adjusted loss of 41 cents a share. Wall Street analysts were targeting a 38-cent loss (Thomson Reuters).

Looking ahead, THQ is guiding to net sales in the range of $160 million and $170 million. THQ expects a second-quarter net loss of 35 cents to 39 cents.

More detailed press coverage of THQ’s finances from other sources can be found at:
Yahoo Finance
Google Finance
Marketwatch

CAPCOM EARNINGS

Japanese publisher Capcom is probably best known for their Street Fighter and Resident Evil franchises but this quarter, Monster Hunter 2g was the bigger story.

Since being released in March for the PSP in Japan, the game has sold more than 2.4m units.

Overall, Capcom posted revenue of about $151m (16.35b Yen), up 14% year over year. Profits more than doubled to $22m (2.38b Yen) from $10m (1.13b Yen) last year.

Because of weak results from their arcade business, Capcom won’t raise forecasts for the fiscal year ending March 31, 2009.

Metue.com

Earnings Recap: Disney, Nintendo, THQ and Capcom

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