Image: Japan Earns Nintendo
Shizuo Kambayashi  /  AP
Nintendo's first-half profit plunged by more than half as sales of its hit Wii home console fizzled in a saturated market.
updated 10/29/2009 11:53:37 AM ET 2009-10-29T15:53:37

Brandname Japanese technology companies, including Nintendo, reported dismal earnings Thursday with Sharp emerging an exception in doubling profits on brisk sales of flat-panel TVs in China, Japan and the U.S.

Nintendo's first-half profit plunged as sales of its blockbuster Wii home console lost momentum in a saturated market. The maker of Super Mario and Pokemon games now expects annual earnings to fall for the first time in six years.

Kyoto-based Nintendo Co. reported a $772 million profit for the April-September period, down 52 percent from a year earlier, and trailed its own May forecast for a $1.09 billion profit. Fiscal first-half sales dropped 34.5 percent to $5.9 billion.

Tokyo-based Hitachi, which makes everything from nuclear reactors to home appliances, and NEC Corp., a provider of IT services and network systems, also fared poorly. But Sharp Corp. reaped rewards from cost cuts and stronger demand for flat panel TVs, which have been falling in price.

The mixed results at Japan's major technology companies underline not only the hardships of the global economic slump but also differing success in achieving a recovery. Overall, the economic dive appears to have bottomed out. But some companies are needing more time than others for a turnaround, the earnings show.

Hit by weak demand abroad and in Japan, Hitachi's July-September losses swelled to $562 million from a $193 million loss a year earlier. It said business conditions remained "severe with production and consumption levels extremely low."

NEC Corp. booked a loss of $110 million for the quarter, compared with $1.14 billion profit the year before.

In contrast, Sharp Corp. credited booming TV sales and cost cuts for profit more than doubling to $82 million in the fiscal second quarter from $33.9 billion during the same period last year.

The Osaka-based maker of the Aquos TV had sunk into the red for the previous three quarters because of the global economic slowdown. But people were now snatching up Sharp liquid crystal display TVs around the world, it said.

Profit outlooks with the exception of Nintendo were unchanged or a little less pessimistic.

Sharp stuck to its forecast for the full fiscal year through March 2010 at $33.3 million profit.

NEC also kept unchanged its annual forecast for a $111 million profit.

Hitachi said it now expects a narrower loss of $2.5 billion. It had initially expected a $2.6 billion loss, which would still have been better than its $8.6 billion loss for the fiscal year ended March.

But Nintendo, which had been booming for the last several years, lowered its projections, citing the erosion to revenue from a recent Wii price cut as well as the strong yen, which reduces the value of overseas earnings of Japanese exporters.

Nintendo said it will earn a $2.5 billion profit — the first time in six years it's predicting earnings to fall.

Nintendo reaped a record $3 billion profit for the fiscal year ended March, and had initially hoped to improve to a $3.3 billion profit this year.

Hiroshi Kamide, a director at KBC Securities Japan, said the numbers weren't good but within expectations. He said Nintendo would have to look to next year and a new machine, perhaps a handheld, to spur the next stage of growth.

"It's just not realistic for them to repeat what they did last year," he said.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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