Has 'Something Big Gone Wrong' At Nintendo?

Respected analyst Hiroshi Kamide thinks so. Following Nintendo's announcement last night of a cut in profit forecasts, Kamide thinks the revision was made because the company know "something big has gone wrong".

"Today's revision suggests that the roaring pace of Wii growth that we've seen until now may be over", Kamide told The Times. "The numbers also imply that we are going to see a sudden collapse in the fourth quarter from record margins to some of the thinnest margins Nintendo has experienced for three years".

Kamide puts this "collapse" down to retailer feedback. Because Nintendo are very closely aligned with the retail sector, constantly communicating on sales data and the level of interest in products, a cut in profit forecasts means "they know something big has gone wrong, and that people are not buying the machines".

Wait, something big has gone wrong? What does he mean by big, exactly? We asked him. Kamide tells us:

It's big in the respect that Wii demand is not being seen at all in Japan, and that they felt they had to reduce annual guidance. Why didn't they just pre-plan and cater to markets where there was demand (or heaven forbid they have enough supply perhaps...)?

Meaning there are too many Wiis in Japan, which people aren't buying, and there aren't enough Wiis in the US & Europe, where people are still buying. Whether through a lack of foresight on Nintendo's part or, as many of you will probably hypothesise, the result of an intentional act to restrict supply to the West, thereby increasing demand.

Doesn't matter which of those it is, either way it's money lost for Nintendo, and money lost contributes to drastic, business-y things like revised profit forecasts.


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