Japanese gaming giant Nintendo, one of the few big companies that seems to have flourished in the downturn, has cut its profit forecast for the year, while its compatriot Sony has reported an operating loss of about $200m for the three months to December. Both companies said the rising yen had hammered margins: the currency has climbed about 30% against the dollar and hit a record high against the pound, making Japanese exports much less competitive. Throw in declining demand from the global slowdown, and 2009 could be a pretty tough proposition…
Life is looking particularly grim for Sony, which continues to languish in the doldrums. The electronics giant said last week that it’s likely to make its first annual loss for 14 years in 2008/9, as demand for its products tumbles all around the world. It’s having particular trouble shifting its big flat-screen TVs, which are unlikely to be big sellers in a recession (and Sony doesn’t make much money from them at the best of times). Even flashy TV ads can't help Sony wind the clock back to the 1980s, when its aspirational TVs and Walkmans were on top of every self-respecting consumer's wish-list.
With Sony's share price slumping 70% in the last year, Welsh-born CEO Howard Stringer (the first non-Japanese to take the Sony reins) is taking drastic action, cutting 16,000 jobs worldwide as he tries to restructure the flabby business – although by all accounts his approach isn’t going down terribly well with the company’s senior Japanese staff…
Of course, Nintendo is in a much healthier position, thanks to the success of its category-killing Wii and DS products. Both consoles sold well over Christmas, with Nintendo's overall sales leaping 17% in the last nine months of the year – some 45m people are now standing in their front rooms waving bits of plastic in the air, courtesy of the Wii. But its profits are being hit because the soaring yen is making its consoles more expensive to import – it’s now lowered its Wii sales target by 3%, and cut its full-year profit forecast to Y230bn (about £1.8bn), a third lower than its original Y345bn prediction.
Still, although the rising yen may be bad for exports, some Japanese specialities are best left in Japan. Take blowfish testicles, for example. Blowfish (or fugu) is considered a delicacy in the Land of the Rising Sun, but it’s also extremely poisonous – unless it’s prepared properly, it can apparently kill you within an hour-and-a-half. So there’s a good reason why chefs need a special license to serve it – as ten unsuspecting diners found to their cost this week, when they ended up in hospital after eating the fishy balls at an unlicensed restaurant. Rumours that Sony staff have been trying to persuade Howard Stringer to have his dinner there remain unsubstantiated...
In today's bulletin:
Shell profits fall on lower oil price (kind of)
Davos Day One: Reasons for cheer despite the long faces
Nintendo and Sony suffer in the Land of the Rising Yen
Bank lending: not ending?
Editor's blog: Sky's no limit