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Nintendo Profit Slides as Sales Fall Short

It reports a 37% decline for the fiscal year as GameCube console loses ground to PlayStation 2.

May 23, 2003|From Associated Press

TOKYO — Nintendo Co. on Thursday reported a 37% decline in profit for its fiscal year through March as sales of its GameCube console fell short of the video-game maker's target in a clear defeat to rival Sony Corp.'s PlayStation 2.

The Kyoto, Japan-based company, which makes Pokemon and Super Mario games, earned $572 million for the fiscal year ended March 31, down from $904 million last year.

Sales totaled $4.3 billion, down 9% from a year earlier. Nintendo generated 75% of its sales overseas.

Since going on sale in 2001, GameCube has lost ground to PlayStation 2, which has emerged the global leader.

As of March 31, 9.55 million GameCube machines have been sold around the world -- short of Nintendo's goal of 10 million and far below the 51.2 million PlayStation 2 consoles shipped worldwide.

Nintendo is about to face competition from Sony in portable game machines as well, where its Game Boy has dominated. This month, Sony announced it will introduce its own hand-held, the PlayStation Portable, next year. It has not shown a prototype or given a price.

Nintendo has sold 33.8 million Game Boy Advance machines, including 15.7 million in fiscal 2002.

The arrival of a Sony portable is a big threat to Nintendo at a time when it is counting on Game Boy Advance sales and hoping to sell games that link the Game Boy Advance with the GameCube, said Takeshi Tajima, analyst at BNP Paribas in Tokyo.

"Trying to prevent GameCube from dying out is the only strategy left for Nintendo," he said. "When the gap in market share is this great, a rally from behind is virtually impossible."

Nintendo is forecasting even lower profit at $553 million for the fiscal year ending March 31, 2004. It predicts sales will improve to $4.7 billion.

In fiscal 2002, Nintendo fared better in selling game software than in selling machines.

It sold 59 million games for Game Boy in fiscal 2002, up 26% from 47 million a year ago. It sold 46 million games for GameCube, about triple the 14 million in fiscal 2001.

Nintendo executives have said they no longer hope to compete in making more sophisticated machines. They want instead to make software, an effort that won't cost as much but can produce profit.

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