Wall Street Journal Lists What To Watch For In Nintendo Earnings


WSJ Journalist Takashi Mochizuki has published in the Wall Street Journal what to look out for from Nintendo when they announce their Earnings Report at the end of their 2016 Fiscal Year this week. Such topics include Nintendo Switch Sales, Quality Of Life Products, Smartphone Games and more, you can check it out below.

NintendoCo.NTDOY +1.31% is scheduled to announce its fiscal 2016 earnings after the market closes on Thursday. Here’s what you need to know.

EARNINGS FORECAST: Analysts polled by data provider Quick expect Nintendo to report a net profit of ¥94.4 billion ($865.6 million) for the 12 months ended March 31, more than five times the year-earlier ¥16.5 billion.

REVENUE FORECAST: The analysts forecast revenue of ¥477.6 billion, down from ¥504.5 billion a year ago and slightly higher than Nintendo’s own guidance of ¥470 billion.

WHAT TO WATCH

SWITCH: Nintendo plans to reveal March sales of its console-handheld hybrid Switch, launched globally on March 3. Analysts expect the number to around 2.3 million to 2.5 million, above Nintendo’s initial target of two million. Nintendo will also give a sales target for the current fiscal year. Demand remains strong, and The Wall Street Journal reported last month the company is beefing up the production plans for the fiscal 2017, though its sales target may be conservative to reduce risk of a later guidance downgrade.

SWITCH SOFTWARE: Along with a sales forecast for the Switch itself, Nintendo will also announce how many copies of Switch software it expects to sell this fiscal year. Analysts say 20 million copies, including titles by outside developers, would be a fair number and anything beyond 25 million a positive surprise—and a good indication that Nintendo is confident about sales of the Switch itself. A positive software-sales outlook would suggest that even if the console forecast itself is conservative, there is a strong chance of an upgrade later.

SMARTPHONE GAMES: Nintendo is lining up powerful game franchises for smartphone platforms this fiscal year, and Chief Executive Tatsumi Kimishima may shed some light on coming titles. The Kyoto-based company plans to release two or three this fiscal year, starting with Animal Crossing, which is especially popular among casual game fans. For Nintendo, smartphone games are just a way to raise awareness of its characters among a broader group of consumers so they buy Nintendo game systems and related merchandise, but the smartphone-game business itself has been successful. Nintendo has released three titles so far—Miitomo, Super Mario Run and Fire Emblem—each with its own revenue model. Analysts wants to know how much Fire Emblem earned because the game charges a small fee for a chance to draw strong characters, and the total sum will be large if many users paid in the game.

QOL: Nintendo has remained almost silent on its Quality-of-Life business, a new initiative for the company. Previously, Nintendo said it would release a sensor to improve quality of sleep, but the project has delayed by quality issues. Still, Nintendo hasn’t given up, and some progress could be announced during the current fiscal year.

RETRO: Nintendo last year released a revival version of its Nintendo Entertainment System console that originally hit the market more than three decades ago. Thought it has been popular, Nintendo has decided to halt production for now because it is working on a “related project” that could be formally announced soon. Any products from the console-revival project line are meant to reawaken the gaming passion of grown-ups who used to play, and so get them to buy a Switch. Neither the production volume nor the revenue contribution from the line itself would be large.

Write to Takashi Mochizuki at takashi.mochizuki@wsj.com

Source: Wall Street Journal

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