Date
13 December 2017
A Nintendo Switch game console is displayed at an electronics store in Tokyo. The Switch’s early success has fueled hopes for strong earnings in the coming years. Photo: Reuters
A Nintendo Switch game console is displayed at an electronics store in Tokyo. The Switch’s early success has fueled hopes for strong earnings in the coming years. Photo: Reuters

Nintendo doubles profit outlook on strong Switch console sales

Japanese videogames maker Nintendo Co. Ltd., already expecting its highest earnings in seven years, almost doubled its full-year operating profit forecast on Monday as supply shortages for its new Switch games console began to ease, Reuters reports.

Demand for the hybrid home-portable Switch has led to a near-doubling of Nintendo’s stock price to nine-year highs since the device’s March launch. Sales have exceeded the company’s initial estimate, outstripping those of predecessor Wii U, and leaving suppliers scrambling for parts.

“We’ve boosted Switch production to meet strong demand as it was difficult for customers to buy the consoles at retail stores,” Nintendo president Tatsumi Kimishima said at an earnings briefing, adding the firm misjudged demand.

The Switch’s early success has fueled hopes for strong earnings in the coming years, as solid demand for new consoles is widely regarded as a prelude to strong sales of high-margin game software over several years.

However, competition is set to intensify into the year-end holiday shopping season as Microsoft Corp. releases its high-powered, high-resolution Xbox One X console on Nov. 7.

“The true power of the Switch would be tested during the upcoming holiday season,” Kimishima said.

Nintendo now expects profit of 120 billion yen (US$1.06 billion) for the year ending March versus 65 billion yen estimated three months ago, boosted by Switch sales as well as a weaker yen against the euro.

The new outlook is still below a Thomson Reuters Starmine SmartEstimate of 133.60 billion yen drawn from the projections of 22 analysts.

Nintendo also raised its year-end Switch sales forecast to 14 million consoles from 10 million. The new annual target would alone exceed lifetime sales of 13.56 million consoles for the Wii U, which was on the market for about five years.

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