Nintendo sells poorly, executive cuts his own pay by half
All is not well in Nintendo after the 3DS did not live up to the forecasted sales figures expected of the handheld gaming device. The poor performance has had a domino effect on the company, and as their stock prices fall, the company plans to sell the 3DS
on a loss and their top executive taking a massive pay cut.
Kicking off the bad news with the fall in share prices: Nintendo’s stocks were already at their lowest point in six years when another 12.2 percent drop on Friday, took the price even lower.
Nintendo’s stock prices dropped by 5% on two consecutive days, following the reveal of their next generation console, the Nintendo Wii U at this year’s Electronic Entertainment Expo, and analysts speculated that the downward trend was set to follow until
the company did something sharpish.
The move has had Nintendo’s finance department running around in chaos as they proceeded to slash both their forecasted sales as well as their full year profit forecast by considerable amounts.
‘What counts as a considerable amount?’ An average gamer might ask. Well the answer is in the multi-millions as Nintendo cut their end of the year profit forecast to $258-milllion, which is a 82% cut in case anyone was wondering.
The move was made after the net loss for the past three months was recorded at $329-million dollars.
This prompted a number of changes; the first of which was the announcement that Nintendo will sell its portable gaming device at a loss, in an effort to boost demand and increase its disappointing sales figures.
The Nintendo 3DS was beaten by Sony’s PlayStation Portable in the Japanese charts and seeing how the PSP is over five years older, it does raise quite a few concerns about the product not being able to compete with an ‘out-dated’ piece of technology.
Nintendo are expected to drop the price of the 3DS to $169.99 on the 12th of August, from the original $249 price point. The prices will be dropping in almost every region with Japan set to see a considerable cut in prices where the 3DS will now
retail for 15,000 Yen (the original price was 25,000 Yen).
Australia will also be able to get its hands on the portable gaming device for $250 (Australian dollars that is).
In order to compensate customers who bought the device on its release, Nintendo is giving away 20 free games to keep them happy.
Lastly, Satoru Iwata, Nintendo’s CEO and President, showed quite a bit of character when he took the blame for the poor showing of the company and the lacklustre sales of the 3DS.
He also outlined the pay cuts all the ‘higher-ups’ in the organisation were taking, “For cuts in fixed salaries, I'm taking a 50 percent cut, other representative directors are taking a 30 percent cut, and other execs are taking a 20 percent cut.”
It seems Nintendo really need to pull up their socks or risk further losses in the future.
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