Smartphones Crushing Nintendo

According to a new survey released by market research firm Interpret, one-time fans of portable gaming systems like the DS and PSP are ditching them in favor of smartphones like Apple's iPhone.

The news comes amid heightened rumors that Sony, and its joint mobile phone venture Sony Ericcson, is about to unveil an Android-based smartphone that'll integrate PSP game functionality.

"Gamers appear to be defecting from their handheld gaming devices to phones to get their gaming kicks," says Interpret's report, which polled 9,000 U.S. consumers. "A full 27.2% of consumers who indicate that they play games on their phones only (and not on the DS/PSP) actually own a DS or PSP, but do not actively use the device(s)."

Those defectors are being joined by some of gaming's biggest names. John Carmack, legendary designer behind classics like Doom, has been an advocate of the iPhone as a gaming system for several years and has released several high-profile titles via Apple's App Store. And Epic Games subsidiary ChAIR is set to release an iPhone/iPad exclusive game this week, Infinity Blade, that could well outshine anything we've seen so far on purpose-built portables.

"The proliferation of highly multifunctional smartphones and messaging phones is a very real threat to the dominance by the DS and PSP of the handheld gaming market," Courtney Johnson, Interpret's Manager of Research and Analysis, said in a statement. "Devices which satisfy a variety of entertainment and utility are fast outstripping single-function devices as consumer favorites."

Are you leaving your DS or PSP at home in favor of a gaming-capable smartphone? Let us know why in the comments.

Nintendo Issues Dismal Forecast

Nintendo today announced that it expects to report a loss of 15.64 yen per share for the six months ending September 30, 2010. Previously, they had forecast net income of 547.38 yen for these six months.

The company also revised downward its forecast for the full year ending March 31, 2011. Instead of earning 1,563.94 yen per share for its fiscal 2011, it now expects to earn 703.78 yen.

This sharp reversal in Nintendo's expected financial performance means that its own forecasted net income per share is expected to drop by 60.6% from the 1,787.84 yen it earned in fiscal 2010.

Very little seems to be going well for Nintendo. The stock seems very overvalued at over 40 times earnings and shareholders should seriously consider selling their stock.

Cut and paste the following URL into your browser to read Nintendo's complete press release on its revised forecast.
http://www.nintendo.jp/ir/pdf/2010/100929_2e.pdf

Nintendo Reports Quarterly Loss

Nintendo reported its first quarterly loss in more than two years due to a strong Yen and lower demand for DS players. The net loss was 25.2 billion yen ($291 million) in the three months ended June, compared with a 42.3 billion yen profit a year earlier. The game maker said it booked a foreign currency-related one-time loss of 70.5 billion yen.

The company yesterday said the euro weakened to 107.81 yen in the quarter, from 124.92 yen as of March 31, while the dollar fell to 88.48 yen from 93.04 yen. A stronger Japanese currency reduces the value of Nintendo’s overseas sales and assets. Nintendo maintained its full-year exchange-rate estimate at 120 yen for the euro and 95 yen for the dollar.

First-quarter sales of DS hardware dropped 47 percent to 3.15 million players, while those of software dropped 23 percent to 22.4 million units, the company said. Nintendo released 168 titles for the handheld player in the period, compared with 278 games a year earlier.

Nintendo’s stock price is down 23 percent this year, while the benchmark Nikkei 225 has declined 14 percent.

For the full fiscal year ending March 2011, Nintendo continues to forecast a net profit of 200 billion yen and an operating profit of 320 billion yen on revenue of 1.4 trillion yen.