Capcom 3rd Quarter Financial Results: Fiscal Year Ending March 31, 2010

Key insights

6 takeaways

01
Capcom revised its full-year fiscal 2010 sales forecast downward to 65,000 million yen due to a strategic decision to postpone major software titles.See it on page 23
02
Nine-month financial results for the period ending March 31, 2010, showed net sales of 49,987 million yen and operating income of 4,817 million yen.See it on page 5
03
The home video game segment remains the company's primary revenue driver, with performance heavily reliant on the Monster Hunter series.See it on page 12
04
Arcade operations and the contents expansion segment, including mobile and pachinko/pachislo, reported losses during the third quarter due to a lack of new product models.See it on page 20
05
Management is targeting a rebound for the fiscal year ending March 31, 2011, driven by the release of Super Street Fighter IV and Lost Planet 2.See it on page 26
06
The company improved its financial position by reducing current liabilities and trade receivables while actively acquiring treasury stock.See it on page 8

Summary

The third-quarter financial results for the fiscal year ending March 31, 2010, reflect a period of transition for Capcom, characterized by strong performance in the first half of the year followed by a strategic slowdown in the third quarter. While net sales reached 49,987 million yen and operating income rose to 4,817 million yen for the nine-month period, the company experienced a decline in the third quarter due to the absence of major new title releases. The primary thesis of the report centers on the strategic postponement of key software launches to ensure a more balanced release schedule in the upcoming fiscal year, which has necessitated a downward revision of full-year forecasts.

Key findings highlight the reliance on the Monster Hunter series for driving home video game revenue, which remains the company's largest segment. Conversely, the arcade operations and arcade game sales segments faced challenges, with the latter reporting an operating loss due to an insufficient number of new models. The contents expansion segment, encompassing mobile content and pachinko/pachislo machines, also struggled with losses, though the company expects a recovery through the introduction of new proprietary models. Financial position data shows a significant reduction in current liabilities and trade receivables, alongside a proactive approach to capital management through the acquisition of treasury stock.

Looking ahead, the company maintains a conservative outlook for the remainder of the 2010 fiscal year, projecting net sales of 65,000 million yen. However, management expresses optimism for the fiscal year ending March 31, 2011, forecasting a substantial rebound in sales and profit. This growth strategy relies on the release of postponed titles, such as Super Street Fighter IV and Lost Planet 2, alongside increased investment in the online gaming sector and structural reforms within arcade operations to improve overall profitability.