TOKYO (Reuters) – Japan’s Nintendo Co Ltd on Thursday cut its Switch sales forecast to 24 million units from 25.5 million units previously for the year ending in March, as global chip shortages affect production.
Nintendo sold 8.28 million units of its Switch console in the six months to end September, compared to 12.53 million in the same period a year earlier.
The global ship shortage is hampering efforts by the Kyoto-based firm to boost sales of its aging Switch device, which is in its fifth year on the market.
Nintendo launched the $349.99 Switch OLED model on Oct. 8 ahead of the year-end shopping season but it remains in short supply in many markets.
With console gaming a cyclical business and Nintendo highly dependent on a single system, the timing of Switch peak sales is the focus of intense debate among investors and analysts.
Early data points to the improved Switch OLED model giving sales a bump. However, some observers worry that many buyers are likely upgraders rather than new customers, diminishing the potential bounce for software sales.
“Our main concern is still a lackluster game pipeline combined with a sharply declining tie-ratio that is likely to drive earnings lower,” Jefferies analyst Atul Goyal, who has downgraded Nintendo to underperform, wrote ahead of earnings.
Tie-ratio is a closely watched indicator that refers to the amount of software bought by hardware owners.
However, most analysts remain bullish, with 11 of 18 analysts having a “strong buy” or “buy” rating on the stock, according to Refinitiv data.
Nintendo shares have declined by around 25% this year.
(Reporting by Sam Nussey; Editing by Kim Coghill)
