Nintendo Looks Very Solid, Says Jefferies’s Goyal
Nintendo Co. reported its best quarterly earnings since 2008 and raised its sales outlook as momentum for its Switch console continued while industry-wide supply constraints hampered the launch of rival hardware from Sony Corp. and Microsoft Corp.
The Kyoto-based games company said its operating profit was 229.7 billion yen (US$2.2 billion), far above the 189.6 billion yen average of analyst estimates compiled by Bloomberg. Nintendo upped its annual forecast for the second quarter in a row and now expects full-year Switch sales of 26.5 million units, up from its previous projection of 24 million, which it has already surpassed. The company also boosted its forecast for operating profit by 24 per cent on the back of a surge in sales brought on by the coronavirus outbreak and hit game Animal Crossing: New Horizons.
Soon to enter its fifth year on the market, the portable Switch sold 11.6 million units in the holiday period, up 7 per cent on a year earlier. Sales remained strong even after the holidays, President Shuntaro Furukawa said. Nintendo has stoked the gadget’s popularity with customized limited editions, a cheaper Switch Lite and a series of blockbuster titles driving hardware sales. In 2020, Animal Crossing tapped into the need for soothing escapism during pandemic lockdowns.
“The Switch has turned from being a console to a lifestyle product ‘tailor-made’ for COVID-19 times, with Nintendo surfing on that wave,” said Tokyo-based industry analyst Serkan Toto.
Nintendo shares outperformed console rivals Microsoft and Sony in 2020 and the new PlayStation 5 and Xbox Series X have faced production and logistics setbacks that have limited their availability. In response to those pricier and more powerful machines, Nintendo is planning an upgraded version of the Switch with the potential addition of 4K output, Bloomberg News has reported, tied to a slate of new game releases later this year. Those plans may yet be altered by component supply shortages across the electronics and auto industries.
Efforts to monetize its characters outside of software and hardware sales suffered a setback after the company postponed the debut of Super Nintendo World, located within the Universal Studios Japan theme park near Osaka, for a second time due to the pandemic.