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While many companies have warned of the risks posed by the
global semiconductor shortage, most have stopped short of
cutting targets. Toyota Motor Corp was also an exception on
Thursday, cutting its vehicles sales outlook https://www.reuters.com/business/autos-transportation/toyota-second-quarter-quarterly-profit-climbs-2021-11-04
for the year to end-March.
"We can't produce enough to meet the demand we are expecting
during the upcoming holiday season," Nintendo President Shuntaro
Furukawa told a news briefing as the Kyoto-based company revised
down its Switch sales target to 24 million units.
"Currently there is no sign of improvement and the situation
continues to be severe so I can't say how long it will
continue," he said.
Second-quarter operating profit tumbled 32% from the same period
a year earlier to 100 billion yen ($880 million), but the gaming
firm lifted its annual forecast 4% to 520 billion yen, helped by
a weaker yen.
Sales of the Switch device - now in its fifth year on the market
- slumped by a third to 8.28 million units in the six months to
end September from the same period a year earlier.
There was a smaller year-on-year decline in software sales and
Nintendo raised its full year software forecast by 5% to 200
million units. It commonly raises targets widely seen as
conservative during the financial year.
"That is with a weakening corona effect and without an epic
blockbuster like "Animal Crossing" this time around," said
Serkan Toto, founder of the Kantan Games consultancy, referring
to the boost from stay-at-home gaming during the pandemic.
With console gaming a cyclical business and Nintendo highly
dependent on a single system, the timing of peak Switch sales is
the focus of intense debate among investors and analysts.
Nintendo launched the $349.99 Switch OLED model on Oct. 8 but it
remains in short supply in many markets.
Early data shows the improved model giving sales a bump.
However, some observers worry that many buyers are likely
upgraders rather than new customers, diminishing the potential
bounce for software sales.
"Our main concern is still a lackluster game pipeline combined
with a sharply declining tie-ratio that is likely to drive
earnings lower," Jefferies analyst Atul Goyal, who has
downgraded Nintendo to underperform, wrote ahead of earnings.
The tie-ratio is a closely watched indicator that refers to the
amount of software bought by hardware owners.
Nintendo continues to line up high profile releases for the
system, with "Pokemon" remakes launching later his month and a
new title, "Pokemon Legends: Arceus", going on sale in January.
Nintendo shares closed down 1.7% ahead of earnings and have lost
25% this year.
($1 = 114.1100 yen)
(Reporting by Sam Nussey; Editing by Kim Coghill and Edwina
Gibbs)
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