Japan's Nintendo Co Ltd said on Thursday sales of its Switch console fell 22% in the first quarter as demand for the hit device fades in its fifth year on the market.
(Subscribe to our Today's Cache newsletter for a quick snapshot of top 5 tech stories. Click here to subscribe for free.)
Investors are watching gaming firms closely for signals that the COVID-19 pandemic sales boom may be running out of steam. Nintendo is highly dependent on the cyclical console business, with sales of its devices traditionally peaking around the fifth year.
Nintendo saw sales of Switch Lite units more than halve to 1.14 million during the April-June quarter but maintained its full-year forecast for Switch hardware at 25.5 million units. It sold 4.45 million Switch consoles, including the Lite, during the quarter.
The creator of Super Mario and Animal Crossing said first-quarter operating profit fell 17% to 119.8 billion yen ($1.1 billion), falling short of a Refinitiv consensus estimate of 129.3 billion yen.
In contrast, Sony Corp said on Wednesday sales of its new PlayStation 5 were robust, helping it post a record profit during the quarter.
Also Read | Nintendo refutes report claiming it will make more profit from Switch OLED
Both companies have warned that shortages of semiconductors could hurt game console output beyond current targets.
Kyoto-based Nintendo is hoping to revive Switch sales momentum with a new $349.99 Switch OLED model launching on Oct 8. It is also relying on a pipeline of popular games including "WarioWare: Get It Together" and remakes of Pokemon titles to boost earnings.
It stuck with its full-year profit forecast of 500 billion yen, lower than an average prediction of 623.5 billion yen. The company is known for releasing conservative profit outlooks that it revises up through the business year.
In a shareholder pleasing move, Nintendo on Thursday also announced a plan to buy back up to 1.51% of its shares worth up 100 billion yen. ($1 = 109.6200 yen)
