Squeenix Slashes Profit Forecast by 43%

Squeenix Slashes Profit Forecast by 43%

Square Enix has drastically reduced its consolidated forecasts for its fiscal year ended March 31, 2006, lowering net income expectations by 43 percent.

In November 2005, Square Enix forecasted 17.5 billion yen ($149 million) net income, but today lowered those expectations to 10 billion yen ($85 million). Revenue was scaled back more than 8 percent, from 136 billion yen ($1.16 billion) to 125 billion yen ($1.06 billion), and operating income was lowered nearly 50 percent, from 28.5 billion yen ($242 million) to 15 billion yen ($128 million).

The shortfalls are expected despite strong sales of Kingdom Hearts II and the Japanese release of Final Fantasy XII, a game that sold more than 1.7 million copies in its first four days of release. Kingdom Hearts II, which released on March 28 in the States, actually topped U.S. software dollar sales charts for the month, according to NPD Group. Still, Square Enix said that its offline games segment won’t meet original forecasts.

Its online games segment experienced "unsatisfactory performance of subscription revenues of new online game titles". The company did state that Final Fantasy XI still has "steady performance of subscription revenues", and is the main online performer for Square Enix.

The company’s mobile segment fell short as well, and Taito, which was acquired by Square Enix in September 2005, also underperformed.

A sliver of silver lining reveals that the publication segment is expected to exceed forecasts, thanks to revenues from new comic titles which follow Full Metal Alchemist. Also, the success of the CG movie Final Fantasy VII: Advent Children is expected to help its respective division exceed forecasts.