Nintendo Earnings: What to Watch


EARNINGS FORECAST: The Japanese videogame company is expected to report a net profit of ¥6.8 billion ($63 million) in the 

quarter through September, according to a poll of analysts surveyed by financial data provider Quick. A year earlier, it reported a net loss of ¥8.02 billion. It is also expected to largely wipe out its operating loss
REVENUE FORECAST: Revenue is expected to fall to ¥106 billion in the quarter from ¥115 billion a year earlier
-EARNINGS OUTLOOK: While the figures for the second quarter are set to look more encouraging, helped by robust sales of high-margin software, analysts say the real test for Nintendo will be the quarter through December, including the holiday shopping season. Jefferies analyst Atul Goyal says it is possible Nintendo will lower its guidance for the current fiscal year due to weak hardware sales. While Nintendo forecasts an operating profit of ¥40 billion for the year through March, Goyal predicts a loss of ¥25 billion
-NEW SERVICES, APPS: The company has said it will launch a new healthcare-related service with more details to come before the end of the year. Some analysts also predict the unveiling of a smartphone application. Investors will keep an eye out for any information on these possible new offerings. But some Nintendo watchers say what the company really needs is a more drastic change in its strategy, such as making its games available through smartphones
-RESTRUCTURING: The company has so far been reluctant to embrace wider restructuring measures. Investors will pay close attention to any specific steps aimed at cutting expenses and streamlining operations, including potential job cuts
-CHINA STRATEGY: Analysts are hoping Nintendo will explain how it will expand its business in China as well as other emerging markets, where many see the biggest potential growth
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