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Nintendo annual net profit solid but outlook cautious

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Nintendo's profits were sent soaring by a boom in demand for video games during the pandemic and the runaway popularity of the Switch
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Nintendo on Tuesday reported a solid net profit for the financial year to March on the strong performance of its blockbuster Switch console, but issued a cautious forecast.

Uncertainties linked to the global chip shortage and potential production and transport delays caused by Covid-19 lockdowns could hit future profits, the Japanese gaming giant warned.

The company, which has benefited from a string of popular titles including “Pokemon Legends: Arceus”, posted a 2021-22 net profit of 477.7 billion yen ($3.7 billion), down just 0.6 percent on-year.

But it expects net profit for the current financial year of 340 billion yen, a yearly drop of around 29 percent.

Nintendo’s profits were sent soaring by a boom in demand for video games during the pandemic and the runaway popularity of the Switch, which was launched in March 2017.

It also released the Switch Lite in 2019 and the Switch OLED, with upgraded graphics and memory, in October 2021.

Growth in sales of these consoles “demonstrated a good balance between each of the three individual models”, Nintendo said.

“As a result of stable performance among the overall hardware lineup, final sales totaled 23.06 million units” in the last financial year, it added.

Nintendo said software sales also grew 1.8 percent on-year to 235 million units, “making it the highest annual software sales figure ever posted for a Nintendo platform to date”.

Highlights included “Mario Party Superstars” and its three Pokemon titles. The most popular was “Pokemon Legends: Arceus”, which sold 12.6 million units in the last financial year, it said.

– Supply chain woes –

Hideki Yasuda, senior analyst at Toyo Securities, told AFP Nintendo is “doing very well”, calling the weaker yen and the strong performance of Arceus a “double benefit”.

But he warned that the company may find itself “unable to make hardware and unable to move products” as cargo ships wait in waters off Shanghai, which is under lockdown as China tries to stamp out Covid-19.

Nintendo said that “if Covid-19 interferes with production or transportation in the future, this might impact the supply of products”, warning that production may also be affected by the chip shortage.

Serkan Toto, an analyst at Kantan Games in Tokyo, said the Switch has been key to Nintendo’s success.

“For the first time in over 30 years, Nintendo is only focusing on one system,” instead of dividing its resources between different businesses such as TV consoles and handheld gaming devices, he said.

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Sandberg exit unlikely to improve Facebook: whistleblower

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Frances Haugen's leaked documents suggested executives knew their platforms could fuel hate speech and damage the mental health of young people
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The departure of controversial Facebook executive Sheryl Sandberg is unlikely to improve the troubled social media giant, whistleblower Frances Haugen told AFP.

Haugen, a former Facebook engineer who leaked internal documents last year suggesting the firm put profits before safety, pointed out that Sandberg’s replacement came from a team whose remit was to help the firm to expand.

The “growth team” was part of the problem and the decision showed the company was “not listening to the heart of the critiques”, she said.

Sandberg, the number two at Facebook parent Meta, shocked Silicon Valley last week by announcing she was stepping down after 14 years at the firm, steering its rise from niche social network to ad-tech juggernaut.

But she had increasingly become the public face of a firm beset by scandals over misinformation, data protection and even accusations of fuelling ethnic violence.

Haugen’s leaked documents suggested executives knew their platforms could fuel hate speech and damage the mental health of young people.

The revelations led to huge criticism of Sandberg and her boss, Mark Zuckerberg, whose business — renamed Meta in 2021 — also includes Instagram and WhatsApp.

– ‘Did she do enough?’ –

Haugen, speaking to AFP this week ahead of addressing a cybersecurity forum in Lille in northern France, said there was a “fundamental tension” about Sandberg’s role.

“Did she do enough to stand up to Mark, or to demand Mark be a better leader? I don’t think so.”

She praised Sandberg, though, for establishing a strategic response team in 2018 to combat efforts to misuse the network.

“Sheryl did set up the parts of the company that were actively concerned with the safety of people who live in fragile places like Ethiopia,” she said.

But she said it “doesn’t seem particularly promising” that Sandberg will be replaced by Javier Olivan, the head of Meta’s “growth team”.

In announcing Olivan’s promotion, Zuckerberg wrote on Facebook that he had a “strong track record of making our execution more efficient and rigorous”.

Haugen wished him luck in his new role but said the growth team embodied “many of the things that I consider problematic about Facebook”.

Much of Haugen’s criticism stemmed from a central accusation that Facebook had pursued growth and profit with no concern for the safety or wellbeing of its users.

The growth team was central to that effort.

“The fact that the person who got to replace Sheryl comes from that part of the organisation feels that they are not really listening to the heart of the critiques,” said Haugen.

Meta did not immediately respond to a request for comment.

– Optimism on Musk –

Haugen has never fitted the stereotypical whistleblower image of a scrappy outsider — she has wealthy backers and a slick campaign that has seen her addressing parliaments around the world.

She told AFP in an interview last year she planned to start a youth movement to help empower young people to take charge of their online lives.

Aside from Facebook, she is sanguine about other recent developments in tech.

The saga of Elon Musk’s on-off takeover of Twitter, for example, has left many commentators questioning whether the billionaire magnate might do more harm than good to the social media firm.

But Haugen reckons he might just be on to something, saying she was “cautiously optimistic”.

“Part of why Facebook makes bad decisions is because it’s a publicly traded company,” she said.

“Elon Musk taking Twitter private provides an opportunity to go and do the house cleaning that Twitter needs.”

And she is heartened by a new European Union law — known as the Digital Services Act — that forces social media to regulate content.

She said it should break open the tech giants to independent scrutiny, which was a “really, really good deal”.

Overall, she said her revelations had made a positive impact — Facebook has doubled its spending on safety and staff working on safety issues say they have more space to operate.

“I’m incredibly heartened by how seriously leaders around the world have taken us,” she said.

“We have different conversations now about what social media should be.”

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Italy’s Draghi says EU should cushion energy inflation blow

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Draghi highlighted that inflation in the eurozone single currency area reached 8.1 percent in May
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Italian Prime Minister Mario Draghi on Thursday suggested an EU-wide scheme to protect citizens from higher energy costs resulting from Russia’s invasion of Ukraine.

“We must consider replicating some of the joint tools that have helped us recover swiftly from the pandemic,” Draghi told delegates gathered in Paris for a meeting of the Organisation for Economic Cooperation and Development (OECD).

He highlighted that inflation in the eurozone single currency area reached 8.1 percent in May — much of it driven by higher prices for energy including oil and gas following Moscow’s assault on its neighbour.

“Rising inflation is not wholly the sign of overheating (in the economy), but largely the result of a series of supply shocks,” Draghi said.

The former European Central Bank chief said the SURE unemployment support scheme, agreed by EU nations in 2020 as the first pandemic wave was breaking over the continent, could serve as a model.

It provided up to 100 billion euros ($107 billion) across the bloc to buttress national budgets sapped by the sudden need to aid large numbers of people with measures like short-time work schemes.

SURE “provided cheap and stable loans to the EU member states so that they could save jobs and support incomes”, Draghi said.

“A similar instrument — this time targeting energy — could ensure vulnerable countries have more room to help their citizens at a time of crisis” as well as “shore up popular support for our joint sanctions” against Russia, he added.

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Slash airline emissions to meet Paris targets: report

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State intervention will need to ensure emissions peak as early as 2025, said the ICCT report
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The world needs “early, aggressive and sustained” government intervention to cut aviation emissions if Paris Agreement temperature goals are to be met, a think tank said Thursday.

Airlines must start to slash emissions before the end of the decade and by 2025 if possible, said the International Council on Clean Transportation (ICCT) in a new report.

The 2015 Paris climate treaty enjoins nations to cap global warming at “well below” two degrees Celsius, and 1.5C if possible.

Earth’s average surface temperature has already risen 1.2C above preindustrial levels.

To project aviation sector emissions, the ICCT ran three models assuming different levels of traffic, fuel efficiency and other factors.

All of them improved on a baseline “business-as-usual” scenario, which would emit nearly 50 billion tonnes of CO2 by mid-century — more than annual emissions from all sources today.

The most optimistic model — which assumes “widespread investments in zero-carbon aircraft and fuels, peaking fossil fuel use in 2025, and zeroing it out by 2050” — would see a reduction of 22.5 billion tonnes of emissions by 2050. 

That would put aviation on course to cut greenhouse gas emissions by “an amount consistent with a 1.75C warming”, said the ICCT.

“But it would require aggressive policies to peak emissions by 2030 at the very latest.”

These findings were more positive than anticipated but remain very ambitious, commented lead author Brandon Graver.

“The all-in strategy to deploy clean planes and fuels cuts emissions even deeper than we expected,” he said.

“But public policies will be needed to peak emissions as early as 2025 to put aviation on a 1.75°C pathway.”

IATA, which represents 290 airlines accounting for 83 percent of global air traffic, pledged last October to achieve net-zero carbon emissions by 2050.

The aviation industry is among the fastest-growing sources of greenhouse gases, and one of the most difficult sectors to decarbonise. 

Many experts are counting on innovations in hydrogen fuels or so-called sustainable air fuels (SAF) made from non-fossil fuel renewable source to meet industry targets.

Improvements in operational efficiency also hold potential for reducing the sector’s carbon pollution.

The International Air Transport Association (IATA) has put the cost of such improvements at $1.55 trillion over 30 years.

IATA projects continued growth in air travel.

The industry expects to carry 10 billion passengers by the middle of the century, more than double the 4.5 billion in 2019, the most recent full year unaffected by the Covid pandemic.

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