Nintendo Loses $283m in Apr-June 2010

Alright probably I'm too late now to explain you this but in case anyone reads this I still write it down. First, this definitely isn't because of production ramping up, because these costs won't be represented in this report. If a company produces goods they will sell later on, they put them as reserves into their balance sheet, cause it wouldn't make any sense to only report the expenses. It might be costs for R&D, but I'm not sure if they would put that into non-operating expenses, and I don't think that they had resonably more expenses in the R&D department during last quarter compared to other quarters. So what this is all about is really the exchange rate between the yen and the dollar as well as the euro. During last quarter, both the euro and the dollar have been taking dips, and the euro has sunk to prices never thought to be possibly just a while back. For a company like Nintendo that has a huge part of expenses in Japan and thus having to pay them in yen, this is massive. It could mean that they start making a loss on every sold Wii or DS, and maybe this is what happened after the price cuts. If we think they may have made 20 % profit with every sold hardware unit, they are just even now because that's about the amount the exchange rates have changed. I hope I could clarify some things.

It cant be 3DS R&D and production ramp-up. It also cant be Wii2 R&D. Both of those are operating expenses. Iwata, and this article, are carefeul to make the distinction that this is a non-operating loss. What this means is that Nintendo's cost of business (operating cost) for the quarter was less than the amount of money they made (revenue), which leads to a profit. Then from that profit they were charged what seems like a ridiculous amount of money not related to operations, which has resulted in a loss of any profit they made this quarter and took an additional $283M out of the bank. But, as the article states, this seems to be a one time deal and Nintendo elected to pay it out instead of taking on interest debt (aka smart business).

When the 3DS comes out, Nintendo will have more success than it ever had before and will continue its success for a long time. So no need to worry about the temporary loss.

Oh well, the FX movements have been erratic as of late, especially with Greece and the Euro taking a hit. Guess they didnt do enough hedging.

I remember reading an article back in 2004 I think, where Nintendo had reported a net loss for the first time in the company's 100+ year history... now that's a damn successful business if there ever was one!

I jutst read alot of your comments and its all bullshit. Having a loss or a serious dip before a new console/Handheld launch is normal. Pluss nintendo said it costs alot more to makes thtese then a normal DS

It probably because the are ramping up production for the new handheld. Nothing more nothing less. this is normal.

RnD for the Wii and RnD/production costs for the 3DS would have a lot to do with this, and I think SMG2 was expected to sell slightly better maybe

Nintendo... And a loss? Wow. I wonder what they are up to... Could this be costs of the 3DS, or costs for the next Wii?

Basically a lot of it must be 3DS R and D

Doesn't matter as NIntendo will STILL BE profitable at the end of their fiscal year. When the 3DS comes out it will surge Nintendo's revenue and profits anyways. Nintendo finally has a working 3 pillar ( I like to call it the Big 3) strategy that will only expand their market and continue to degrade the market share of it's competitors to the dismay of it's competition esp Sony and their floundering 3 pillar hardware: PS3, PSP, and PS2!!!

@ Tri I dont think so. Ninty going to bank when 3ds comes out.

Just so I'm clear on things. The 3DS isn't going to be adding numbers to the DS lite/i is it? It's going to be treated as a brand new system, right? So when it launches we're not going to be seeing articles pop up that say the DS has sold over 200 million units, are we?

Despite Nintendo attaining revenue from overseas, they still largely operate from within Japan, meaning less revenue and more expenses. Sony, on the other hand, has factories within the US and Europe, so they can get around the foreign exchange rates. Nintendo needs to expand their operations into other countries. Create factories within the US and Europe to manufacture consoles specifically for those regions. Invest in overseas game development (expand NST and Retro, acquire studios in America and Europe). If they are able to balance the expenses into each region and not just stay locked within Japan, they will have an easier time with foreign exchange rates. I'm not sure if this is against their business philosophy. They seem to want to keep their operations in Japan so they can keep a close eye on things.

thx superchunk agreed

@ninty_shareholder64 no, its the exchange rate. For the last few years the Yen has grown steadily stronger which means every sale outside of Japan is worth less inside of Japan. So unless Nintendo were to raise prices outside of Japan, they are making less money (in Yen) for the millions of units sold outside of Japan. On top of that DS yoy is down due to buzz for 3DS and they are building tons of 3DSs for release in Japan by end of this calendar year, which so far have not sold a single unit. Once it hits shelves and subsequently flies off them, the revenue will be huge. Therefore I'd predict a HUGE 3rd qtr for Nintendo that will far outweigh this small loss.

Hilarious all those years ago when I read an online article about Nintendo switching their currency from Yen to Dollars, didn't know what it meant and thought whatever. Now for the past couple years with dipping economy alternating from the Japanese bubble to the US recession you keep hearing it brought up.

Viper1 Yeah, I can read. But the question is what is that foreign exchange? Or better: what are the most important factors? I don't think it's the Yen-dollar exchange rate, it's R&D of 3DS and perhaps Wii2 (like RisenTerran suggested).

I bet it is R&D cost from 3DS and Wii 2 :D

Oh yeah sorry i was wrong, i got confused , but i just read the same article in kotaku, and now i got it , here the first paragraph is has more number than words and it was too much for me hAUSHuashUS. Nintendo would make much more money if they let the money stay in the US, but japanese company does not seens to trust others when the subject is some billions of dollars.

So Ocarina of Time 3D is a launch title? Wow @ Pokemon heartgold/Soulsilver selling 10 million copies so fast. This thing is selling like it was a new game.

Ninty_Shareholder64, Nintendo technically had a $500 million profit but elected to take a $794 million foreign exchange charge which reduced those profits to a reported loss of $288 million.

Is that the result of the costs from 3DS production preparation? Could very well be, it's the only thing I can imagine. And then with the release of 3DS they will get their money back and more, much more. Perhaps they already produced over 1 million 3DS and paid for that, so with every 3DS they will get their money back. Am I completely wrong? Or is it blatant?

Wasnt expecting a loss from Nintendo... but it seems that the yen is hurting pretty much every Japanese company :-(

@ shonen errrrrm, im sorry to say that you are the one who is totally wrong. Nintendo lost $283.3 million in the last three months. Thats not just lower profits, that IS loosing money. you might want to read more closely next time

HUH?? a loss is a loss, they head a net loss this quarter because of what seems as foreign expenses. IT could mean anything from paying debt, to future investment. But the fact they are keeping the same projection means that it's probably just a one quarter thing.

Sorry but this headline is totally wrong nintendo did not lose anything , they just had a smaller profit i may not be a journalist of something but when you say someone had loss it means (at least for me) that they had a negative earning like nintendo is debit. cuz did not had any profits and if they had profits how could they LOSE anything ? Putting it at short "Thei did not lose, they just did make the same amount of money." Head Line fix " Nintendo's profits are down"

OT: Never seen such a detailed breakdown of any company's report here like that ever!

Nintendo are now getting a taste of their own medicine from Apple!

they really profited about 500Mil.... but put all their foreign exchange loss on that quarter, which makes it a loss... Either they inflated the other year's values or they are doing this to massively inflate the end of the year when the 3DS comes out... which is likely as they did not revise their yearly values despite the loss... we're gonna see a 1.5B last quarter :p

Is anyone reading the article? Foreign expenses of around 800 million were spent, thats why it didnt profit

Well, we'll surely see the Nintendo is doomed brigade out in full force soon. A loss is never a good thing, but something tells me Nintendo have been expecting this for some time-they haven't revised their full year profit forecast.

can somebody explain to me how they get a loss if all their system's make a profit? im confused..

YOUCH!

USA has a strong Wii lenup for the holidays. Kirby, Wii party, and DK... very good indeed. Japan also has kirby, last story, and DK which is very big seeing those titles are very japanese oriented. ALl in all though not a bad quarter for the Wii

Typo? " The company still expects to ship 30m DS + 3DS systems (no breakdown was given) by March 2010."

I forget which quarter sometime between 2004 and 2005, but Nintendo had the first ever quarterly loss in company history and for the exact same reason as this current quarterly loss.

damn pokemon silver/gold sold 10 mil and mario galaxy 2 already at 4+ mill

Even if it is a special occurence, a loss is never something good. :/ Ouch.