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Nintendo Stock Drops On Loss Forecast

David Smith

Nintendo's stock price took a significant hit on Monday, the first day of trading after the company announced that it is looking forward to its first half-year loss in 41 years of public trading. Nintendo shares dropped 2.8% on a day of otherwise positive trading on the Nikkei stock exchange, although its share price stayed relatively high at 8,920 yen.

Late Friday, Nintendo announced that it expects a net loss of 3 billion yen ($27 million) for the first half of the current fiscal year, April through September. That forecast replaced an earlier expectation of a 15 billion yen net profit.

Continuing low sales of the GameCube console are a partial factor in the loss, but the current strength of the Japanese yen against foreign currencies is far more significant. The yen has steadily increased in value against the dollar and other Western currencies, which hurts a company like Nintendo that does much of its business overseas. When the yen grows stronger, Nintendo's holdings of foreign currencies and sales abroad make less money in yen terms, leading to the drop in its overall results.

Despite the prediction of a net loss, Nintendo didn't change its sales forecasts for GameCube and Game Boy Advance hardware and software. Nintendo expects worldwide cuts in the price of the GC hardware to boost sales.

Copyright © 2003 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in ZD Games.





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