Nintendo logo seen in Izumisano, Osaka Prefecture, Japan. (Photographer: Buddhika Weerasinghe/Bloomberg)

Nintendo Names New Chief With Switch Console on Solid Ground

(Bloomberg) -- Nintendo Co. appointed Shuntaro Furukawa as its new president, handing the reins to a relatively young and unknown senior executive after reporting that profit is on track to reach the highest since 2010.

Nintendo Names New Chief With Switch Console on Solid Ground

He’ll replace Tatsumi Kimishima, a former banker who last year oversaw the debut of the new console, the Kyoto-based company’s biggest bet in years. For the fiscal year through next March, Nintendo forecast profit of 225 billion yen ($2.1 billion). While that would be the most in eight years, it was below analysts’ average estimate for 308.6 billion yen. Nintendo typically posts conservative guidance, and this is no exception.

Furukawa, 46, joined Nintendo in 1994, worked in global marketing and served on the board of partly owned Pokemon Co. He takes over as the strong results and outlook underscore Nintendo’s confidence that it has worked out the Switch’s first-year production kinks and can attract buyers from beyond the hybrid console’s core base. While the company had a strong lineup of games last year to drive hardware sales, it only has one new big-name title — Super Smash Bros. — scheduled for release this year.

“Furukawa comes across as thoughtful, very knowledgeable and quite well informed,” said Atul Goyal, an analyst at Jefferies Group, who has met him several times in person. “He is fluent in English. He may be the perfect person to fill the communication gap that exists between Nintendo and investors.”

A graduate of Waseda University, Furukawa worked for about 10 years in Germany, according to the Nikkei newspaper. While he spent much of his tenure at the company’s accounting office, rising to head Nintendo’s corporate planning division in 2015, Furukawa has also contributed to software development and was involved in the making of the Switch.

“We will develop the company to its fullest,” Furukawa said at a news conference in Osaka. “I will balance Nintendo’s traditions: originality and flexibility.”

Last year’s numerous blockbuster hits include games such as Zelda, Super Mario, Mario Kart and Splatoon 2. That raises the stakes for products like Nintendo Labo, cardboard accessories that the company sees as key to broadening the Switch’s appeal beyond initial adopters. So far, analyst reception to the Labo has been mixed. The company in February said racing game Mario Kart Tour will be released during the coming fiscal year, without specifying a date.

“No other console in recent history offered such an array of blockbusters in the first 12 months after launch,” Serkan Toto, founder of Tokyo-based games consultancy Kantan Games Inc. “But the Switch absolutely needs more mega hit games in 2018.”

Here are some other key figures disclosed by Nintendo:

  • Operating profit was 21.1 billion yen in the latest quarter, compared with analysts’ average projection for 20.2 billion yen.
  • Nintendo forecast 20 million Switch shipments for the year, up from 15.1 million shipments in the prior period.
  • Switch software titles totaled 63.5 million in the latest year, exceeding the company’s forecast for 53 million. Nintendo expects to sell 100 million in the coming year.
  • As of the end of March, Switch owners had on average bought 3.9 titles per console, a figure Nintendo estimates will rise to 4.5 in a year.
  • Annual revenue from smartphone games rose 62 percent to 39.3 billion yen. Income primarily attributed to Pokemon Go fell to 10.3 billion yen from 20.3 billion yen a year ago.

©2018 Bloomberg L.P.