What Does Nintendo Loss Really Mean?
The Kyoto giant posted an expected loss on Friday, causing shares to fall today - but who really cares, and what does it mean for next-gen hardware?
Shares in Nintendo fell nearly three per cent today, after the Kyoto giant announced on Friday that it would post its first-ever interim loss for April-September. The reasons provided have not given shareholders confidence, with Iwata-san and company citing huge foreign exchange losses and disappointing GameCube sales.
What does Nintendo have in store for shareholders?It's not all doom anbd gloom for Nintendo though - far from it. Some analysts point out that, as consistently the most profitable videogame company in the industry's history, Nintendo is merely looking at a short-term loss period thanks to accounting technicalities, with a large proportion of assetts held overseas.
Many have been quick to jump on the GameCube hardware price-cut, effective now on both sides of the Atlantic ($99/£79), as a desperate tactic to sell units to counter the expected loss. But the reality is that a price cut was roughly scheduled for now anyway and, frankly, is unlikely to make any difference with GBA, Pokemon, and other franchise turnover so high.
"Can Nintendo again ride off the success of Pokemon if N5 underdelivers like GameCube has?"
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The opinion that the loss period will be short lived has led some to shout "now is the time to buy" Nintendo shares.
There's little doubt Nintendo will support itself well into its next generation 'N5' technology. But with no guarantee such a lucrative royalty system will exist on the new hardware, having turned many publishers away this time, investors may need to consider its potential against fierce competition - and whether the firm can again ride off the success of Pokemon if it underdelivers like GameCube has.
Director, Kikizo.com
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