Square Enix Revises Revenue, Profit Projections Down

Japanese-headquartered publisher and developer Square Enix has revised its forecasts for the fiscal year ended March 31, 2006, citing lower sales than expected from both offline and online segments, with projected revenue down 8% and operating profit down by almost half. Specifically, Square Enix has lowered expectations for its operating profit nearly 50 percent to ¥15 billion ($127.8 m), compared to the ¥28.5 billion ($242.9 m) previously reported. As a result, the company's consolidated net profit has been lowered as well, from ¥17.5 billion ($149.1 m) to ¥10 billion ($85.2 m). Finally, projected revenue fell nearly 8 percent, from ¥136 billion ($1.16 b) to ¥125 billion ($1.06 b). The company stated that the offline segment of its game development and publishing business, which includes marquee titles Kingdom Hearts II and the Japanese release of Final Fantasy XII, failed to meet sales expectations by some degree, despite strong sales in the second half of the fiscal year. Similarly, the company's online segment fell below expectations, despite the steady performance of its marquee MMO Final Fantasy XI. This was due to lower than expected subscription revenues from newly introduced online games released during the fiscal year, according to the company, which has made no major online game launches in the West besides continued Final Fantasy XI expansions. On a more positive note, sales of comics based around Square IP Fullmetal Alchemist, as well as the CG film Final Fantasy VII: Advent Children are both expected to help associated divisions within the company in exceeding previous forecasts. But other factors, such as the underperformance of the recently acquired Taito Corporation and delays in efforts within the company's mobile phone segment, also helped to further drive down Square Enix's bottom line.