Nintendo Hurt By Q1 Dip in DS Hardware and Software, Wii Software Sales

Nintendo was hurt in Q1 ended June 30 by declines in DS hardware and software shipments, as well in as Wii software demand outside the Americas and Japan, it said Thursday. The company swung to a 25.2 billion yen loss from a 42.3 billion yen profit in Q1 last year, while revenue fell 25.6 percent to 118.6 billion yen. Operating profit tumbled 42.2 percent to 23.3 billion yen. Q1 earnings were the worst that the company has reported in the console cycle that started when the Wii was introduced in 2006.

Global DS hardware shipments tumbled to 3.15 million units in Q1 from 5.97 million in Q1 last year, Nintendo said. Shipments to the Americas, which include its largest market, the U.S., fell to 1.26 million from 2.51 million. Japan shipments fell to 450,000 from 610,000, while shipments to other regions fell to 1.44 million from 2.85 million. Europe makes up the largest chunk of shipments to other regions. Nintendo sold 132.04 million units total of all DS models through June 30 -- 48 million in the Americas, 30.86 million in Japan, and 53.18 million in other markets, it said.

Of the 3.15 million DS handheld systems that shipped in Q1, 1 million were the DSi, which saw its sales tumble from 3.65 million in Q1 last year due in large part to Nintendo’s introduction of the DSi XL with larger dual screens. DSi shipments to the Americas tumbled to 390,000 from 1.56 million, while Japan shipments fell to 140,000 from 530,000 and shipments to other markets fell to 480,000 from 1.57 million. Cumulative DSi shipments increased to 18.82 million -- 7.35 million in the Americas, 4.9 million in Japan and 6.57 million in other markets. Despite the declines, the DS remained the best-selling handheld videogame platform globally as it continued to far outsell the Sony PSP, especially in the U.S.

Nintendo shipped 1.57 million DSi XLs in Q1, including 600,000 in the Americas, 270,000 in Japan and 700,000 in other markets. That boosted cumulative DSi XL shipments to 3.65 million -- 1.03 million in the Americas, 1.31 million in Japan and 1.32 million in other markets. Not nearly enough DSi XLs shipped in Q1 to make up for the decline in DSi shipments. The DSi XL was released first in Japan, in November, then in March in the U.S. and Europe. Nintendo is counting on the coming release of its 3DS handheld system, which achieves 3D effects without the need for special glasses, this fiscal year, running through March 2011, to boost handheld hardware sales for the year. Also hurting overall DS hardware demand was the release of fewer new DS games than in Q1 last year, Nintendo said.

DS software shipments tumbled to 22.42 million copies in Q1 from 29.09 million in Q1 a year ago. Shipments to the Americas fell to 10.72 million from 11.29 million, while Japan shipments fell to 5.02 million from 7.17 million and shipments elsewhere tumbled to 6.69 million from 10.62 million. Cumulative DS software shipments increased to 740.93 million, including 289.29 million in the Americas, 182.5 million in Japan and 269.14 million in other markets.

Wii software shipments dipped to 28.17 million in Q1 from 31.07 million in Q1 last year. Shipments to the Americas inched up to 15.31 million from 15.27 million and Japan shipments grew to 2.02 million from 1.75 million, but shipments in other markets fell to 10.83 million from 14.04 million. Cumulative Wii software shipments increased to 573 million, including 312.61 million in the Americas, 51.10 million in Japan and 209.3 million elsewhere. Best-selling Wii games included Nintendo’s Super Mario Galaxy 2, which it said sold 4.09 million copies worldwide.

The only bright spot in Q1 was Wii hardware shipments, which grew to 3.04 million from 2.23 million. Japan shipments fell to 190,000 from 210,000, and shipments in regions outside Japan and the Americas fell to 1.05 million from 1.14 million. But shipments to the Americas grew to 1.8 million from 880,000. Cumulative Wii shipments increased to 73.97 million, including 35.2 million in the Americas, 10.52 million in Japan and 28.24 million elsewhere. The Wii remained the best-selling current-generation console globally, ahead of the PS3 and Xbox 360.

Nintendo’s Q1 revenue was also hurt by the rise in value of the Japanese yen compared with Q1 last year, which it said meant “a significant negative impact to” sales when reported in yen. Earnings, meanwhile, were hurt by foreign exchange losses of 70.5 billion yen, “caused by the increased strength of the yen” in Q1, it said.

The company still expects to sell 30 million DS hardware units, 150 million DS software units, 18 million Wii hardware units and 165 million Wii software units globally this fiscal year, it said. It still expects that profit for the fiscal year will drop 12.5 percent from last year to 200 billion yen, revenue will dip 2.4 percent to 1.4 trillion yen and operating profit will fall 10.3 percent to 320 billion yen.