£59 million Q1 profit for Nintendo masks GameCube gloom
Buoyed by the success of Game Boy Advance SP, Nintendo has posted big profits, but it's still plain to see that the GameCube is in significant trouble.
Nintendo shrugged off the gloom surrounding the underperforming GameCube to post first quarter net profits of Â£59.1 million (11.5bn Yen) for the three months to June 30 2003, buoyed by stellar Game Boy Advance console sales, foreign exchange rate gains in Europe and the well timed re-emergence of the Pokemon brand.
Sales for the period hit 83.82 billion Yen (Â£432.4 million), up five per cent on the same period last year. Unusually, it wasn't possible to compare its quarterly earnings with last year, because the Japanese company was stating its Q1 profits for the first time.
The weak Yen boosted its European related business by some 7.6 billion yen, and the firm looks very well placed to meet its modest first half net profit target of 15 billion Yen (Â£77.4 million). The recent storming success of Pokemon Ruby and Sapphire and the associated rise on GBA SP sales on the continent so far makes this target look a formality. Despite the figures, Nintendo has elected to stick to its previously stated full year net profit forecast of 65 billion yen (Â£335 million) on sales of 550 billion Yen (Â£2.8 billion).
On the back of the release of the sleek GBA SP, some 3.24 million units sold worldwide during the period, accounting for around 85 per cent of its hardware total. By March 2004, Nintendo aims to sell around 20 million GBAs.
Meanwhile, the fate of the GameCube is looking increasingly bleak, with a mere 800,000 units of the underperforming console selling through from April to June. Targets of six million have been set for the end of its financial year, but it's looking unlikely that it will reach this unless it's prepared to heavily discount the console in the run up to Christmas - something Nintendo has traditionally been reluctant to do.
Nintendo's senior managing director Yoshihiro Mori told a news conference yesterday that the firm would not resume GameCube manufacturing until this autumn at the earliest, but surprised attendees by sticking to the six million unit target despite the continuing poor sales globally.
More pointers to Nintendo's strategy are likely to be announced on Thursday, when president Satoru Iwata will hold a news conference, but investors and analysts will be demanding a radical change of strategy regarding the GameCube if the company intends to compete in the current console generation.