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Nintendo announces new game console as sales, profit slump

The Japanese video game company reports a 29% drop in revenue and a 66% plunge in net income for the fiscal year. Sales of its Wii and DS consoles took a big hit.

April 26, 2011|By Alex Pham, Los Angeles Times

Battered by declining sales of its Wii video game console, Nintendo Co. announced it would introduce a new, ultra-powerful console in 2012. The announcement came as Nintendo posted double-digit declines in sales and profit for its fiscal year ended March 31.

The Japanese game company said Monday that its revenue slumped 29% last year to just more than 1 trillion yen, or roughly $12.4 billion. Profit slid 66% to 77.6 billion yen, or $948 million. The results were much lower than Nintendo had forecast: Last May it said it expected sales of 1.4 trillion yen and net income of 200 billion yen.

Losses due to the strong yen, which meant sales outside Japan converted to fewer yen, accounted for $604 million of Nintendo's annual loss.

Core sales also were to blame. After a massive wave of popularity, sales of the Wii fell 25% to just over 15 million units last fiscal year, compared with 20.5 million a year earlier. Nintendo's DS series of hand-held consoles also took a hit. Last fiscal year, DS sales dropped 22% to 21.1 million units — including 3.6 million units of Nintendo's 3DS console, which was introduced in late March. The year before, Nintendo sold 27.1 million DS consoles.

The waning popularity of the Wii, which was introduced five years ago, had sparked rumors that Nintendo would introduce a successor console.

The company confirmed the speculation, saying it would show a playable model of its new console at the industry's E3 conference in Los Angeles in June and would start selling the device next year.

Nintendo declined to reveal details of its new console, called "Project Cafe" within the company. Game analysts expect the device to sport more powerful processors, addressing one of the Wii's key weaknesses — its lack of high-definition graphics, which has made Wii games appear old-fashioned compared with games for its beefier rivals, Sony Corp.'s PlayStation 3 and Microsoft Corp.'s Xbox 360.

And like the PS3 and Xbox 360, Nintendo's new console is also expected to have a bigger emphasis on online games, said Edward Williams, an analyst with BMO Capital Markets. That would provide a glimpse of how Nintendo will approach a time when most or all games are be distributed over the Internet.

Nintendo shares fell 3.6% on Monday to $238.

alex.pham@latimes.com

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