Nintendo cuts forecasts, plans to introduce new version of DSi handheld

Nintendo cut its annual profit forecast by 23 percent after sales of its Wii console started to lose momentum in the most recent six-month period. But to keep handheld sales strong, Nintendo plans on introducing a new version of its Nintendo DSi handheld in Japan soon.

The Kyoto, Japan-based company still has enviable results in the video game industry, which has been weak for the past six months. But the new forecast will likely be a big disappointment to those who thought Nintendo’s momentum was unstoppable.

To fight off the recession doldrums, Nintendo says a new DSi will hit the market on Nov. 21. It will be known as the DSi LL in Japan, and the DSi XL in North America and Europe. The new dual screens will be 93 percent larger (4.2 inches versus 3.25 inches) than the old ones and will have a better viewing angle. The new version will arrive in North America and Europe in the first quarter of calendar year 2010. The new DSi will be important in fending off Sony, which launched its new PlayStation Portable go in October. In Japan, the new DSi LL will sell for 20,000 yen, or $220.

The maker of video game hardware and software said net income will fall to 230 billion yen ($2.5 billion) in the year ended March 31, 2010, compared to an earlier projection of 300 billion yen. Analysts have been expecting the fiscal year net income to come  in at 270 billion yen, according to Bloomberg.

In the U.S., Sony overtook the Wii with brisk sales of its PlayStation 3 for the first time in a single-month period. That was after Sony cut the price of the PS 3 by $100 and launched a smaller, more compact version. Nintendo cut its price by $50, but it’s unclear whether that change has inspired consumers to go back into the stores.

This new shortfall will inspire some debate. To some degree, Nintendo has been hurt by the recession. Net income dropped 52 percent to 69.5 billion yen in the six months ended Sept. 30, from 144.8 billion yen a year earlier. Revenues were down 34 percent.

Nintendo’s DS and DSi units face stiff competition from Apple’s iPhone and iPod Touch. Also, free-to-play web site games and social games on Facebook may be stealing away gamers from the consoles. On top of those issues, Nintendo also had a lighter year this year.

While it came out with big games such as Wii Sports Resort and Wii Fit Plus, those titles haven’t compared well to Nintendo’s flagship games of 2008: Super Smash Bros. Brawl and Mario Kart Wii. What’s more, the strong yen has also eroded earnings in dollars. In the second half, Nintendo has high hopes for a new Super Mario Bros. game on the Wii.

For the full fiscal year, Nintendo cut  projected Wii sales to 20 million units from 26 million. Wii game sales are expected to be 180 million now, down from the earlier expectation of 220 million. DS projections remained the same at 30 million. But DS software sales are expected to be only 150 million, not 180 million sold.

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