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Iwata Takes Over Nintendo of America as Projected Earnings Fall Short

Nintendo Co. Ltd. said on Wednesday that president Satoru Iwata will become the acting CEO of Nintendo of America, replacing current chairman and CEO, Tatsumi Kimishima. Nintendo said that Kimishima has been promoted and will serve within parent company Nintendo Co. Ltd., thus he will be transferred from Redmond, Wash., to NCL headquarters in Kyoto, Japan.

"In his new position, he will assume the roles of general manager of Corporate Analysis and Administration, and general manager of the General Affairs Division," Nintendo said. "These titles are currently held by Yoshihiro Mori and Masaharu Matsumoto respectively, both of whom are retiring. Kimishima will assume his new duties in Kyoto later this summer."

Nintendo said the change in management will support the company’s unified global strategy, allow streamlined decision making and enhance Nintendo's organizational agility in the current competitive environment. Meanwhile, Reggie Fils-Aime, Nintendo of America's president, COO and the most public Nintendo official here in the States, will remain in his position. He will report directly to Iwata.

The change arrives after Nintendo revealed that net profit during its last fiscal year ending March 31 only produced nearly half of what was expected thanks to disappointing Wii U sales (pdf). The number was down from the projected 14 billion yen to just over 7 billion yen.

"The operating loss increased primarily due to the sales of Nintendo 3DS and Wii U being weaker than expected," the company stated. "While foreign exchange gains in Non-operating income increased, ordinary income and net income became smaller than the forecast."

During fiscal 2012, net sales were down 1.9-percent compared to 2011's numbers, dropping to 635 billion yen. However the company generated a positive net income, bringing in over 7 billion yen compared to 2011's historical 43 billion yen net loss. Overall Nintendo only pushed 3.45 million Wii U hardware units (390,000 units sold since December) and 13.42 million software units in 2012.

Nintendo said that the Wii U failed to maintain its initial sales momentum due to delays of subsequent games. To fix this, Nintendo plans to release "key titles" beginning in the second half of 2013 and on through 2014. This plan should help Nintendo keep a projected shipping figure of 9 million units sold in fiscal 2013 (April 2013 to March 2014).

Meanwhile, the 3DS did considerably better than the Wii U in fiscal 2012, with 31.09 million hardware units sold – up over a million in the last quarter -- and 95.03 million software units sold. Pushing sales was the larger XL model, and titles like New Super Mario Bros. 2, Super Mario 3D Land, Mario Kart 7, and Paper Mario: Sticker Star.

But with the PlayStation 4 and Xbox Infinity looming, how will Nintendo fare in 2013? As indicated, the company will likely showcase an arsenal of software this June at E3 2013, but will it be enough to distract console gamers away from the new hardware offered by rivals? There's a good chance the answer is no.

However Shigeru Miyamoto recently said that customers need to be patient with the Wii U, that the slow adoption rate was due to the console being "different", not from a lack of titles.

"There was a period when we first released the Nintendo DS that people would say there’s no way people can look at two screens at once," he said. "I almost feel like, as people get more familiar with Wii U and these touchscreen interfaces, that there is going to come a point where they feel like 'I can’t do everything I want to do if I don’t have a second screen'".