How bad is it? This bad:
The company initially predicted that it would shift 9 million Wii U consoles, but the revised sales predictions for the financial year ending in March 2014 now stand at 2.8 million—less than a third of Nintendo’s previous figure. The modifications also see the 3DS sales figures tweaked downward, but on nowhere near the scale of the Wii U.
The company’s operating profit of 100 billion yen ($958 million) that was predicted at the start of the financial year has become an operating loss of 35 billion yen (around $335 million).
Ouch. But how bad is it really? Really this bad:
Nintendo President Satoru Iwata has already said he won’t step down amid the company’s recent poor market performance, but that doesn’t mean he and other Nintendo executives aren’t feeling some of the company’s pain. Nintendo has announced (as reported by the AP) that Iwata will take a 50-percent pay cut for five months starting in February. Two high-level directors, including storied Mario creator Shigeru Miyamoto, will take 30-percent pay cuts, while seven members of Nintendo’s board will see their pay reduced 20 percent.
Executive pay doesn’t affect the bottom line enough to save a company losing hundreds of millions of dollars. So why bother? Simple: It’s the kind of morale-boosting move a company in trouble might make to accomplish one or two things.
• Show employees and investors that management is serious about fixing what’s wrong.
• Keep morale up high enough that your best people don’t start shopping their resumés around.
Preventing the second one from happening is the real trick for a company that’s been losing money and marketshare for three years running.