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Nintendo makes second consecutive annual operating loss as Wii U misses expectations

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Nintendo Wii Wiimote Stock 1020
Nintendo Wii Wiimote Stock 1020

Nintendo made an operating loss in 2012 for the second consecutive year as its new Wii U console failed to spark excitement among consumers. The company lost 36.4 billion yen ($366 million) over the 2012 fiscal year; last quarter, the company unexpectedly predicted that it would lose $220 million in 2012 after previously saying it would turn the same amount in profit. The Wii U has sold 3.45 million units worldwide to date, missing Nintendo's goal of 4 million units for the financial year — itself a lowered expectation after the company initially predicted it would sell 5.5 million systems. Three months ago, Nintendo announced worldwide Wii U sales of 3.06 million.

Wii U misses sales goal by over half a million units

Nintendo's results come after the recent dramatic weakening of the yen, which hit a four-year low of ¥99.95 to the US dollar this month after the new Japanese government implemented aggressive monetary easing. The company made a slim net profit in 2012 largely buoyed by this economic shift. President Satoru Iwata has said he is committed to making ¥100 billion in 2013, and today's earnings report contains that same forecast. However, exchange rate fluctuations won't be enough to help the company achieve its target without a dramatic increase in hardware and software sales. Nintendo says it plans to do that by "communicating the compelling nature of our hardware and software to as many people as possible through our new network service called 'Miiverse,'" as well as by reducing the costs of the Wii U system.


As for Nintendo's 3DS handheld, the company says sales were also "weaker than expected," though it managed to become the leading platform in Japan over the past year. Nintendo sold 13.95 million 3DS systems and 49.61 million software units worldwide in 2012; despite the launch of key software titles such as Mario Kart 7 and New Super Mario Bros 2, the company says they were not able to generate "sufficient sales momentum."

Update: Nintendo has announced a shuffling of the board along with its earnings. Most notable is the promotion of Tatsumi Kimishima from Nintendo of America CEO and chairman to managing director of Nintendo's parent company; his duties as NOA CEO will now be assumed by Nintendo president Satoru Iwata, whom current NOA president and COO Reggie Fils-Aime will report to.