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Nintendo predicts first annual loss, lowers earnings forecast

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Once the most profitable company in the video game world, Nintendo is now swimming in a sea of red ink.

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On Thursday, the company announced a loss of $623 million in the nine months that ended December 31, compared to $639 million in profits a year earlier. And the bad news doesn't end there.

Nintendo has once again been forced to lower its estimates for the full year. The game maker now says it will end its fiscal year (which wraps up on March 31) with an $837 million loss -- a significant step down from the $258 million it had previously expected to lose. It will be the first annual operating loss in the company's history.

[Related: Apple returns to form, blows Street targets away]

"We had higher expectations for the year-end season, but failed to meet them," Nintendo President Satoru Iwata said.

A stronger-than-expected Japanese yen is being blamed for the adjustment. Companies like Nintendo that rely heavily on overseas sales see their numbers suffer when the yen is strong. And as consumers turn their focus to high-definition consoles and smartphones, sales are likely to continue suffering. Nintendo lowered its forecast for 3DS, DS and Wii hardware sales, and expected 3DS software sales to come in lower than initially thought, as well.

There was one item of note in the earnings that could encourage gamers. The company confirmed expectations that the next generation Wii-U will be shipping before Christmas of this year in all territories. And, looking at the current hardware numbers, that day can't come soon enough.

Nintendo sold just shy of 9 million Wiis worldwide between April and December versus 13.7 million units during that time in 2010. And Nintendo DS sales plunged as the 3DS took the spotlight, falling from 15 million in 2010 to only 4.6 million last year.

The Nintendo numbers are particularly grim when compared to mobile rival Apple's earnings, which were released on Tuesday. With more than $46 billion in revenue and a $13 billion profit, Apple shattered records. Those sales came as Apple sold an astonishing 37.04 million iPhones between October and December. To put that in perspective, iPhones were selling at a rate that exceeded the number of people born on this planet each day during the last quarter.

Without a pretty major turnaround, some analysts think Nintendo is in serious trouble.

"Their time of growth (from consoles) is over, and, while I don't think the company will cease to exist, if they don't move into new categories, they will no doubt lose the great scale they've amassed," Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management in Tokyo, told Reuters.

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