Nintendo to make loss for the first time

The Japanese game-maker Nintendo warned it would post its first annual net loss this financial year, cutting its guidance yesterday as the soaring yen and weak software sales dealt fresh blows to the former games industry champion.

The creator of the Super Mario franchise dominated the industry for years with its DS handheld games players and Wii home consoles, but is now struggling to keep up with more versatile gadgets such as Apple's smartphones and tablets.

This year's failed launch of its 3DS handheld games machine – which creates a 3D effect without special glasses – forced Nintendo to slash prices, crushing its profit outlook for the year, while a dearth of attractive software and the yen's strength are causing further pain for the company, which generates 80 per cent of its sales overseas.

Nintendo expects an annual net loss of ¥20bn (£165m), its first such loss in history. In the latest quarter, it posted a ¥19.6bn operating loss.

Yuuki Sakurai, at Fukoku Capital Management in Tokyo, said: "I think they need to change their strategy drastically. Now that people can do so much on their smartphones, will they want to buy a games machine?"

Shares in Nintendo have fallen 50 per cent since 1 April.