Japanese game giant Nintendo Co Ltd on Tuesday announced a decline in its profits for the last business year as competition heated up in the home video game market.
Sony Corp, riding high on strong sales of its PlayStation game console, is seen replacing Nintendo as the king of the home video game market.
Nintendo announced that its parent current profit was 101.0 billion yen ($848 million) in the year ended on March 31, down 13.7 per cent from 1995/96. Current profit is pre-tax and includes gains and losses on investments.
Despite a 15 per cent rise in its parent sales to 345.5 billion yen ($2.90 billion), current profits were depressed by the cost of launching its new 64-bit game machine, Nintendo 64, the company said.
Nintendos net profit also dropped by about 30 per cent to 36.3 billion yen ($305 million) in 1996/97, mainly due to a hefty extraordinary loss arising from losses at its European subsidiaries.
On a group basis, its sales rose by 18 per cent to 418.2 billion yen ($3.51 billion) in 1996/97, but current profit declined 7.5 per cent to 109.4 billion yen ($919 million).
The company said its export income totalled 185 billion yen ($1.55 billion) in 1996/97, which accounted for 53.6 per cent of its total sales. The company expects that the ratio of exports to total sales will increase to 65 per cent in 1997/98.
In the hope of boosting sales and beating back competition from Sonys 32-bit game console PlayStation, Nintendo cut the suggested retail price for its game player in the United States to $149.95 from $199.95 in March.
Nintendo said it shipped out 6.12 million units of the game player worldwide last business year, lower than Sonys estimated 8.9 million shipments of its 32-bit game machine.
Nintendo said it is aiming for shipments of 12 million units this business year, but the number is still lower than Sonys planned shipments of 18 million units for the year.
Analysts said that an increase in sales of software, which have higher margins than game machines, will help Nintendos profits grow in the current business year.
Nintendo said it shipped out 16.6 million units of software which run on Nintendo 64 last business year and aims to sell 40 million units in the current business year.
It expects sales of Nintendo 64 and related software to total 314 billion yen ($2.63 billion) in 1997/98, up sharply from 178.4 billion yen ($1.49 billion) in 1996/97.
As for the current business year, Nintendo expects parent sales of 400 billion yen ($3.36 billion) and parent current profits of 114 billion yen ($957 million).
The company forecast group sales in 1997/98 to reach 490 billion yen ($4.11 billion). Group current profits and net profits are expected to hit 127 billion yen ($1.06 billion) and 67 billion yen ($563 million), respectively.
DM1.8bn Deutsche Telekom net
Reuter BONN
German telecommunications group Deutsche Telekom AG said on Tuesday that 1996 group net profit was at DM1.8 billion and profit on ordinary activities was at DM6.6 billion.
Group sales totalled DM63.1 billion.
The company gave no comparisons for the previous year, but it was expected to provide adjusted 1995 data at a news conference later in the day.
The 1996 data reflected the first year that Telekom paid value added tax. The 1995 figures need to be adjusted as if the tax were paid, in order to provide comparisons with 1996.
The company said in a statement that it reduced its liabilities by 12 billion marks in 1996, of which 1.2 billion marks were paid before becoming due.
The workforce fell by 12,500 employees to 201,000 at the end of December.
