Square Enix Holdings Financial Results Briefing: Fiscal Year Ended March 31, 2011

The Square Enix Holdings financial results briefing for the fiscal year ended March 31, 2011, outlines a period of significant transition and financial contraction. The company reported consolidated sales of ¥125.3 billion and a net loss of ¥12.0 billion, a result heavily impacted by extraordinary losses. Key financial setbacks included an ¥8.8 billion write-down of goodwill related to the Eidos and Taito acquisitions, ¥4.4 billion in losses from cancelled project developments, and foreign exchange losses. Total assets decreased from ¥271 billion to ¥206 billion, reflecting a rigorous reassessment of assets and the redemption of convertible bonds.

Management attributes these results to a shift in the business environment and a strategic decision to tighten selection standards for title development. The company is moving away from a high-volume approach to project development, which previously led to inefficiencies and failures. The core strategy for future growth rests on three pillars: globalization, becoming network-centric, and strengthening intellectual property. The company is rebalancing its development investments to favor global operations over a Japan-only structure and is prioritizing the establishment of ten strong, globally recognized intellectual properties.

The outlook for the fiscal year ending March 31, 2012, remains conservative, with management projecting revenues of approximately ¥130 billion and operating income of ¥10 billion. The company acknowledges that the console packaged software market is shrinking and is actively pivoting toward high-growth areas, including social networking and smartphone gaming, as well as enhancing supplemental earnings through network-based content. While the current period is characterized by rebuilding, the company aims to achieve record profits by the fiscal year ending March 2013.