But when Nintendo said it would be slashing full-year net income forecasts by one-third to $2.55 billion, analyst Hiroshi Kamide with KBC Financial Products speculated that the Wii craze may be burning out--an almost unthinkable prospect amongst many industry watchers.
“Today’s revision suggests that the roaring pace of Wii growth that we’ve seen until now may be over,” he said in a report in the Times.
“The numbers also imply that we are going to see a sudden collapse in the fourth quarter from record margins to some of the thinnest margins Nintendo has experienced for three years.”
Nintendo also drew back Wii unit shipment forecasts for the full year by 1 million units to 26.5 million.
Kamide added that Nintendo may "know something big has gone wrong, and that people are not buying the machines."
The analyst rates Nintendo shares at "sell," a rarity among games analysts.
General commentary amongst English-speaking Internet outlets and anecdotal evidence suggest that gamers had trouble finding Wii hardware at retail during the holidays, although the supply situation has improved over the past months as Nintendo ramped up production.
Other U.S.-based analysts still believe Nintendo has strong fundamentals, but a strengthened yen has negatively affected the exporter of software and hardware.
Softening Japanese sales have also hurt Nintendo, although strong North American and European sales have partially offset the shortfall, said Wedbush Morgan's Michael Pachter, who rates Nintendo shares as "buy."
Arvind Bhatia with Stern Agee was also less alarmed as Kamide in his assessment. "We do not necessarily view the reduction in forecast as a negative given Nintendo has been increasing its forecast all year.
"Rather, we think supply constraints during the holiday season resulted in Nintendo losing sales and management is now factoring this in its revised forecast. We note that Wii hardware was out of stock in the US in late December/early January.