Nintendo Nose-dives after Company Forecasts Losses as Wii U Flops

Nintendo Co. Ltd (ADR) (OTCMKTS:NTDOY) revised its earnings guidance and projected to incur losses for the full year ending March 31, 2014. The Japanese developer also reduced its global sales forecast its Nintendo Wii U, Wii, and 3DS hardware and software. As a result, the stock price of Nintendo Co. Ltd (ADR) (OTCMKTS:NTDO) plummeted 17% to $14.90 per share in the OTC markets in the United States.

Full year earnings forecast

The Japanese games developer estimated that its operating loss will be around ¥35 billion yen and net loss of ¥25 billion or ¥185.50 losses per share. Its net sales is projected at about ¥590 billion.

Nintendo Co. Ltd (ADR) (OTCMKTS:NTDOY) previously forecasted to generate ¥920 billion sales and deliver  ¥100 billion operating income and ¥55 billion net income or ¥410.10 earnings per share.

The company estimated that it would be able to deliver ¥5 million ordinary income despite its operating losses. “The reason why we will post ordinary income despite operating loss situation is that we now assume that the yen will be weaker than our original assumptions at the beginning of the fiscal year, which results in foreign exchange gains,” explained Nintendo Co Ltd. (ADR) (OTCMKTS:NTDOY).

Nintendo Wii U, Wii, 3D, 3DS global sales forecast

According to the Japanese games developer, its Nintendo Wii U game console flopped, and reduced its sales forecast for the Wii U hardware to from 9 million units to 2.8 million units and Wii U software to from 38 million units to 19 million units.

Nintendo Co. Ltd. (ADR) (OTCMKTS:NTDOY) also revised global sales forecast for the Wii hardware and software to 1.2 million units and  26 million units, respectively. The company previously estimated to sell 2 million units of Wii hardware and 20 million units of Wii software.

It also reduced its sales guidance for the Nintendo 3DS hardware and software to 13.5 million units and 66 million units respectively, down from its previous estimate of 18 million Nintendo 3DS hardware and 80 million Nintendo 3DS software.

No major management shake-up

Satoru Iwata, president of Nintendo Co. Ltd. (ADR) (OTCMKTS:NTDOY) expressed apology to shareholders for failing to fulfill its promise that the company will regain its profitability this year. Iwata said, “We failed to reach our target for hardware sales during the year-end, when revenues are the highest,” said Iwata.

Despite his failure, Iwata will remain in his position. He said, “There will be no major management shake-up in the short-term.”