Nintendo confirms new console on the way, reports profit drop

Nintendo confirmed rumors that it will release a new video game console in 2012 as a successor to the aging Wii console. The Japanese company made the announcement as it reported relatively weak sales and profits for the fiscal year ended March 31, 2011.

Nintendo said it plans to release a new console to replace the Wii, which has sold more than 86 million units since its launch in 2006. The company will show a working model of the system at its press conference during the E3 trade show, which takes place June 7 – 9 in Los Angeles.

Nintendo reported that its revenues were 1.01 trillion yen, down 29 percent from a year earlier. Operating income was 171 billion yen, down 52 percent from a year earlier. Net income was 77.6 billion yen, down 66 percent from a year earlier. The company said the weaker results were due to the aging of its Wii console and the Nintendo DS.

During the last month of the fiscal year, Nintendo launched its 3DS handheld, which can display stereoscopic 3D with no glasses necessary. That handheld sold more than 3.61 million units, less than the 4 million units that Nintendo forecast. The device faces a lot of new competition from smartphones and tablets, including Apple’s iPad 2.

Nintendo said the launch was smooth, with two titles selling more than 2 million units. Overall, Nintendo 3DS software sold more than 9.43 million units. The launch results aren’t as stellar as hoped.

But Nintendo’s chief executive, Satoru Iwata, is confident that the 3DS will take off. The Kyoto, Japan-based company says it expects to sell 16 million 3DS units in the coming fiscal year ending March 2012. For the coming fiscal year, Nintendo predicts that its profit will rise 42 percent to 110 billion yen. But it did say that the earthquake in Japan has made the fiscal year unpredictable. The outlook is lower than the 143.8 billion yen that analysts were expecting for net profit in fiscal 2012. Sales are expected to be 1.1 billion yen for the coming fiscal year.

During the fiscal year ended March 31, 2011, Nintendo’s sales in the U.S., Europe and Japan all fell. The company sold 17.52 million DS handhelds during the year and 15.08 million Wii consoles. DS titles sold 120.98 million units and Wii titles sold 171.26 million units. In the coming year, Nintendo has high hopes for key Wii games such as The Legend of Zelda: Skyward Sword.