Nintendo Has Grim First Quarter, Will Push Harder on the 3DS and Reduce Leadership Compensation

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NintendoNintendo revealed selected financial results for its quarter ended June 30, 2011. Not only is Nintendo and its recently launched 3DS doing badly, but the company's leadership is taking responsibility by slashing their own salaries. Seriously. Unlike most American corporate leaders, Nintendo leadership is not only forgoing their bonuses, they are cutting base salaries. Click on to read more details concerning Nintendo's financial results...
For its quarter ended June 30, 2011, Nintendo reported a net loss of ¥25.516 billion (around $330 million) similar to the company's results in the same quarter the previous year. Nintendo cited problems such as a lack of 3DS sales, an increase of 3DS returns and a weak dollar (causing U.S. sales to have a smaller impact on the Japanese parent).

The only 3DS title with substantial sales was The Legend of Zelda: Ocarina of Time 3D, and Nintendo reported selling 4.53 million 3DS units across all regions (compared to 12.13 million units from the DS line of products), supporting assertions that the 3DS is selling poorly and that Nintendo has reduced the price of the 3DS to increase sales before Sony Launches the PlayStation Vita

Nintendo's leadership recognizes that the price drop is a drastic step and that the company is performing poorly, and is taking responsibility by slashing their own salaries. It's worth reproducing President Saturo Iwata's remarks: "It is quite unusual for us to change the price in less than half a year from a product's launch.... I feel greatly accountable for having to make the markdown shortly after the launch, for having damaged our consumers' trust, for having made a significant impact upon the financial forecasts, for the annual dividend now being expected to be significantly less than originally expected and for now forecasting that there will be no interim dividend.... However, for the management to show its accountability for the level of the operating loss of this time and the prospect of no interim dividend, we decided at the directors' meeting yesterday that we would reduce the compensation we will receive as the directors of the company....we have decided to reduce the fixed compensation as well, by reducing it by 50% for the president, or me, a 30% reduction for the representative directors and a 20% reduction for the other directors. Needless to say, the deduction of the fixed compensation is what we volunteered to do in order to show our sincere attitude and to fulfill our responsibility. We really must recover our financial performance and take Nintendo back into the position in the marketplace where it is well appreciated."

So, not only did Nintendo's leadership cut their bonus, but they have decided to reduce base salaries (for the time being). FI would love to see more companies take this kind of responsibility.

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This page contains a single entry by Editor published on July 29, 2011 6:44 AM.

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