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Nintendo Reduces Losses in Return-to-Profit Bid

July 25, 2012
Videogame giant cuts net loss by a third with improved profitability on 3DS hardware.

Japanese videogame giant Nintendo (IW 1000/223) on Wednesday said its net loss for the April-June quarter shrank by about a third, and that it still hoped to return to profit this year as it battles fierce competition and a strong yen.

The Kyoto-based firm posted a net loss of $220 million for the three months through June, compared with a loss of $326 million a year earlier, and was still losing money on its 3DS games console.

Nintendo, which also makes the Wii games consoles, said its operating loss also shrank to $132 million for the same period last year, but sales fell 9.7% to $1 billion.

"The profitability of the Nintendo 3DS hardware is improving, but the hardware has been in negative margin," the firm said in a statement.

Nintendo also said it suffered a foreign exchange loss of $270 million, as the strong yen made the firm's products more expensive overseas while eroding the value of its foreign-earned profits.

The 3DS, the world's first video games console with a 3D screen that works without special glasses, sold 1.86 million units thanks to brisk sales of its software such as "Mario Tennis Open," "Super Mario 3D Land," and "Mario Kart 7."

The Wii home console, to be replaced by the updated Wii U by the end of this calendar year, saw global sales of 710,000 units.

Nintendo left its annual forecast unchanged, saying it would return to profit in the current fiscal year to March 2013, with a profit of $256 million on sales of $10 billion.

"We will strive to take advantage of the release of 'Nintendo 3DS XL' to solidly revitalize the Nintendo 3DS market from this summer through fall," said Nintendo, referring to its planned launch of its wide-screen 3DS.

The results were announced shortly after Japanese markets closed on Wednesday, with Nintendo shares falling 1.57% to 8,150 yen.

The company in August slashed the price of its new Nintendo 3DS by about 40% in Japan after a lackluster debut, followed by similar reductions overseas as it struggled to boost sales ahead of the Christmas rush.

Nintendo has struggled in the face of competition from not only its traditional rivals such as PlayStation maker Sony (IW 1000/33) but also from inexpensive online games that can be downloaded to smartphones and tablet computers.

By Shingo Ito, AFP

Copyright Agence France-Presse, 2012

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