Nintendo to post unexpected loss as Wii successor falters

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January 30, 2013 7:28 PM EST

Japanese games maker Nintendo Co Ltd cut its earnings outlook and forecast a second straight year of annual losses, as the sales of its new Wii U games console lost momentum.

The company forecast an annual loss of 20 billion yen ($220 million) in the year to March, slashing its previous forecast of as much in profit, and falling well short of a consensus estimate of 12.1 billion yen profit from 19 analysts.

"It was a somewhat negative surprise," said Yasuo Sakuma, portfolio manager at Bayview Asset Management.

Nintendo, which began making playing cards in the late 19th century, has been counting on its Wii U - the successor to the six-year old Wii - to revive its performance as competition from Apple Inc and other makers of mobile phones and tablet PC intensifies.

It lowered the sales forecast for Wii U in the year to March 31 to 4 million consoles from its previous estimate of 5.5 million, and also cut the sales outlook for handheld devices 3DS and Wii as well.

The firm reduced its 3DS sales estimate to 15 million consoles compared with an earlier 17.5 million, and cut its projections for the DS to 2.3 million from 2.5 million in October.

Nintendo's downgraded forecast came even as the yen has fallen sharply against other currencies in the past two months, a windfall for the firm that sells more than 70 percent of its products abroad.

Company President Satoru Iwata said software development for the Wii U has not gone as planned, but added the company aims to return to operating profit of more than 100 billion yen in the next financial year, which starts on April 1.

The shift in gaming habits, analysts say, may eventually force the Japanese company to chase profits for Super Mario and other game titles on devices built by other firms.

In November it launched the Wii U, its first console in 16 years to come with a dedicated Super Mario game title. It also features a "Gamepad" controller that functions like a tablet.

It also features a social gaming network dubbed "Miiverse", a bid to catch up with the online strategy of rivals such as Sony.

Before the earnings announcement, Nintendo's shares fell 2.1 percent on Wednesday to 9,350 yen, just above near-10-year low of 8,500 yen touched early this month.

(Reporting by Tim Kelly and Hideyuki Sano; Additional reporting by Ayai Tomisawa; Editing by Daniel Magnowski)

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