Nintendo will be announcing its second-quarter earnings tomorrow and analysts expect them to reveal a net profit of ¥6.8 billion in the quarter through to September. Last year the company reported a net loss of ¥8.02 billion, however this year they’re expected to announce that they’ve wiped out their operating loss. The Wall Street Journal says that Nintendo’s revenue is expected to fall to ¥106 billion in the quarter from ¥115 billion a year earlier. Here’s what they have to say.
WHAT TO WATCH:
- 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.
Thanks, Angel Class