Nintendo cuts Wii-U sales forecast

Recent sales of its DS, 3DS and Wii-U consoles have fallen well short of expectations

Nintendo has cut the sales forecast for its new Wii-U console, but still expects to make an annual profit thanks to the weaker yen.

It now predicts it will sell only four million Wii-Us in the year to March, down 27% from its previous forecast, after sales disappointed.

Nonetheless, the Japanese firm increased its annual net profit forecast to 14bn yen ($154m; £98m) thanks to gains from its weakening home currency.

A year ago it made a loss of 43bn yen.

For the first nine months of its year, the firm reported a 14.5bn yen profit, compared with a loss of 16.4bn yen a year earlier.

Tablet competition

The results, which came after the end of trading on the Tokyo Stock Exchange, provide mixed signals for stock analysts.

The apparent failure so far of the Wii-U to take off versus competition from tablet and smart phone game applications may bode ill for the company's long-term growth prospects.

Nintendo also cut its full-year sales forecasts for its other games consoles, with 3DS sales expected to reach 15 million by March (down 14% from its previous forecast), and DS sales to total 2.3 million (down 8%).

Perhaps the biggest shock will come from the firm announcing that it now expected to make an overall operating loss of 20bn yen for the year, whereas previously it had foreseen a 20bn-yen operating profit. Financial analysts had expected a 12bn-yen operating profit on average.

The company said that the new forecasts took account of the evident turnaround in the yen with the election of Prime Minister Shinzo Abe, who has taken a much more aggressively expansionary stance towards both government spending and the central bank's monetary policy.

The weakening currency provides a two-fold benefit to the company - increasing the value of its foreign currency assets in the short-term, and reversing its steady loss of price competitiveness against foreign rivals in the longer-term.