Nintendo developing new console for 2012

The company has seen profit drop for 2 years and needs a new system to jump-start sales.

By Kim Peterson Apr 25, 2011 1:25PM
Nintendo (NTDOY) will debut a new video-game system next year to replace the Wii, the surprising success that revolutionized the industry.

It's good timing, as Nintendo has now seen two years of profit declines. The company didn't reveal many details about the upcoming console, saying in a short statement only that it will have a playable model to show off in June at the Electronic Entertainment Expo in Los Angeles. Expect an official launch before the holiday season.

The Wii elicited snickers from the industry when it debuted in 2006, coming on the heels of Nintendo's disappointing GameCube, but the system and its motion-sensing controller were a phenomenal success.

Nintendo has sold 86 million Wiis, making it the best-selling home console. The Wii, aimed beyond the traditional game audience, was more adept at luring new players than consoles from rivals Microsoft (MSFT) and Sony (SNE). Sony shares dropped more than 1% today to $30, while Microsoft shares were essentially unchanged at $25.54. (Microsoft owns and publishes MSN Money.)

There are rumors that the new Wii will have more advanced components than the Xbox 360 and PlayStation 3, including a controller with its own 6.2-inch touch screen, Cnet reports. Another site, IGN, reported that the console could cost between $350 and $400 and will hit stores between mid-October and early November. Nintendo is reportedly considering the name "Stream" for the new system.

The new console is a bright spot in Nintendo's otherwise dreary report for the year ended March 31. The company said profit dropped 66% to $947 million and annual sales fell 29% to $12.4 billion. On top of that, sales in Japan -- one of the company's core audiences -- have been affected by the recent earthquake and tsunami.

But Nintendo expects an improvement this year, led largely by sales of the new 3DS handheld game system, which went on sale in the U.S. in March for $250. The company forecast an 8.4% rise in sales to $13.4 billion and said earnings will likely rise 41.7% to $1.34 billion.

Nintendo sold 15 million Wii consoles last year, a drop 27% from the year before. For the next year, it expects to sell just 13 million.

The stock price of the company's ADRs had dropped 4% in midday trading to $29.51.
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