Nintendo Keeps Rolling, But Bumpier Road Ahead

Nintendo's latest results show that it continues to dominate its gaming competition, in units. But net income is down and a modified forecast shows that even the Wii will face challenges.

Nintendo has been notable not just for having the two leading console models on the market, but for making money. Revenue for the first nine months of the current fiscal year (the period from April 2008 through December 2008) was about $17.1 billion, up about 16.7 percent from the same time in 2007. Operating income was almost $5.6 billion, or 27.2 percent higher than 2007. Net income for the nine months was almost $2.4 billion. That was down 17.9 percent from 2007.

Gross margins actually increased by two percent. As with other Japanese companies, including Sony, Nintendo is pointing to the increased value of the yen as an adverse factor -- the loss was over $1.9 billion. A loss on investments was small in comparison: $68.1 million.

Unit sales were massive. In the nine months through December, the DS hit 25.62 million units, or 96.22 million units worldwide life-to-date. The Wii moved 20.52 million units with a life-to-date total of 44.96 million.

But the company's expectations for the fiscal year ending March 31, 2009 are down by about 9 percent from its October forecast. That will still be year-over-year growth, but shows that even juggernauts will slow due to pervasive economic conditions.