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Wii Report: Demand Up but Profits Impacted by Currency

Since the beginning of August, the Japanese Yen has risen almost 35% against the Euro and about ten percent against the dollar.  For Japanese businesses that rely heavily on overseas sales, companies like Sony and Canon, these fluctuations are wreaking havoc on net income as they convert revenues across to their native Yen.  The pain was obvious in Sony’s earnings announcement yesterday.  Today, Nintendo, though on much stronger footing, showed a hint of the same ailment.

In earnings news, Nintendo raised sales targets for the Wii console heading into the holiday period  but simultaneously lowered net profit forecast for the fiscal year ending in March by 16% (about 65,000m Yen).  

The good news is, even with earnings revised downward, the revised outlook is still up 487.22b Yen year over year. Gaming, is not slowing down.

“Foreign Exchange is going to offset an increase in sales volume,” Nintendo’s Ken Toyada explained but on the positive he said the “business itself is going well and [Nintendo is] expecting sales volume to increase.”

In the first half of the year, Nintendo sold  10.1m  Wii worldwide bringing life to date sales to more than 34.5m units.     Software for the console passed 81.4m units (229.85 life to date).   The DS portable sold 13.37m units in the first half (84.3m life to date).

Nintendo’s President Satoru Iwata said in a news conference, “it is safe to say strong game demand is intact despite all the talk about the financial crisis.”   

On the strength of continuing high demand, back in August Nintendo notched Wii sales forecasts upwards from 25m units to 26.5 for the fiscal year.  Now, the company has raised the number to 27.5m.

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