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Nintendo posted profits of $301 million (?34 billion) for the July to September quarter, logging growth for its Switch console, but missing its own targets and analyst estimates.
Despite the results being Nintendo’s best second quarter in eight years, investors sent the share price down in Tokyo on Wednesday, the day after the earnings announcement, though it had recovered some of the losses by early afternoon.
Revenue for the quarter was up to $1.96 billion (?221 billion) as the Kyoto-headquartered company sold 3.2 million of its Switch consoles, compared to 2.9 million a year ago.
The company’s own forecast is for 20 million hardware units in the financial year to March 2019, of which it has achieved just over a quarter with half of the year gone. While the year-end quarter is always the strongest across the game sector, Nintendo will need a spectacular surge in Switch sales to hit its goal. Nintendo is also forecasting profits of $1.5 billion (?165 billion) for the year. The company maintained its projections, though it has a track record of overly optimistic forecasts.
Software sales topped 24 million, compared to 14 million a year ago, though with more third-party games doing well, which are less profitable for Nintendo. The year-end period will see releases of new Mario and Pokemon games — by far its biggest and most lucrative franchises — which should significantly boost both hardware and software numbers.
Revenue from smartphone games was up 9 percent in the quarter to $86 million (?9.7 million). The company didn’t release figures from its newly launched online console subscription service. Nintendo has been slower than its rivals in the shift to online and smartphone gaming.
Meanwhile Nintendo’s two retro gaming consoles, the NES Classic Mini and SNES Classic Mini, sold a solid 3.7 million units. The seven-year-old 3DS portable console, which is coming to the end of its life cycle, shifted a million units.
The Switch’s total sales of 22.9 million have now passed those of the GameCube and Wii U, but have a long way to go to catch Sony’s PS4, which has already topped 80 million.
Nintendo stock was down 0.5 percent in mid-afternoon Tokyo trading at ?35,080 ($309.90), while the Nikkei 225 index was up 1.7 percent. The stock is down around 20 percent on the same time last year.
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