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Nintendo Posts Loss After Weak Sales of GameCube

The $26.2-million deficit in the first half of its fiscal year is the firm's first since 1962. Debut of new device is planned.

November 14, 2003|Alex Pham | Times Staff Writer

Video game pioneer Nintendo Co. on Thursday posted its first loss since 1962 and announced plans to debut a new game device next spring in an effort to gain ground against market leader Sony Corp.

Company executives in Japan refused to provide details about the new machine, but sources at Nintendo of America said the product would not be a hand-held like the company's popular Game Boy.

The Kyoto, Japan-based maker of Pokemon and Mario games said the $26.2-million loss in the first half of its fiscal year resulted from weak sales of its GameCube console and the strengthening of the yen, which hurt overseas income, in the six months ended Sept. 30. Sales were $2 billion.

The company posted a $175-million profit on $2 billion in sales a year earlier.

For the fiscal year ending March 31, Nintendo forecast a $554-million profit on sales of $5 billion.

The results cast a shadow on Nintendo's struggle this holiday to recapture its status as the world's dominant video-game maker. But as the No. 3 console manufacturer in the United States -- after Sony, which makes the PlayStation 2, and Microsoft Corp., which sells the Xbox -- Nintendo may have missed its opportunity, at least with the current generation of game consoles.

"They don't have a chance of catching up," said Michael Pachter, vice president of research at Wedbush Morgan Securities in Los Angeles. "But I don't think they expect to either. They're resigned to the fact that they will compete in the next cycle."

The company in October cut the price of its GameCube by a third to $99, a move that has helped speed sales.

Though it lags in the console race, Nintendo leads the hand-held market with its Game Boy Advance, which has sold 42 million units worldwide. That compares with 10.5 million GameCubes, 62.6 million PS2s and 9.4 million Xboxes.

"The Game Boy will sell out this Christmas," Pachter predicted.

Next year, however, Nintendo will have to duel with Sony, which is planning to release a hand-held device dubbed PSP to play games, music and movies.

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