Is Nintendo Back? Company Reports Unexpected Profits

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After several years of operating at a loss, Nintendo has reported that it made 9.3 billion yen in profits during the 2014’s second fiscal quarter.

The past several years have been rough for Nintendo. Stepping off of the gravy train that was the Wii, it experienced sharp declines in profitability that have seen it operating at a loss for several years. That being the case, recent reports from the Japanese game maker would seem to indicate that its fortunes could be taking a turn for the better.

According to the aforementioned reports, Nintendo apparently experienced unexpected operating profits during 2014’s second fiscal quarter. During the period between July and September the company made 9.3 billion yen (roughly $86.1 million). This is, of course, is substantial increase from its situation during the same time last year when it suffered a 3.7 billion yen loss. The company would go on to lose more than $455 million overall during the course of fiscal year 2013 with much of the blame being placed on the Wii U’s lackluster sales performance.

While it might be tempting to see this as good news however, there are some who caution against thinking that everything will be all flowers and sunshine for Nintendo going forward. Speaking with The Escapist, Wedbush Securities analyst Michael Pachter indicted that the company’s recent success might be more muted than some might like to hope.

“Much better expense control drove [Nintendo’s] operating profit,” said Pachter. “This was not a revenue driven event. Revenues continue to decline, hardware sales continue to be exceedingly weak, and although I am certain that Nintendo can hit its profit target this year by cutting costs, the rest of the industry is growing and they are not.”

One has to wonder if the recent success of Super Smash Bros. on the 3DS might also have something to do wit it. That said, if Pachter’s assessment is correct, it could mean that there’s still a lot of work ahead for Nintendo before we can safely say its recent trouble are behind it. We’ve reached out to Nintendo to see if we could get their take on the issue and see what they attribute this profit to.

Source: Reuters

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