Slow start for Square Enix with Q1 losses

While Square Enix's latest financial results reveal a swing to losses for the company, it is relying on big video game hits for the rest of the fiscal year to swing the tide back in its favor. The company's Digital Entertainment sector, which houses its video game development and distribution, reported weak console game sales for the quarter ended June 30, 2012, although it noted that sales of Nintendo 3DS remake Dragon Quest Monsters: Terry's Wonderland 3D were "favorable." In comparison, Square Enix said that sales for its smartphone and PC games were good, with browser game Sengoku Ixa and social mobile game Final Fantasy Brigade posting upbeat results. However, with a planned line-up of potentially strong titles to come for the rest of the fiscal year from the company, including Sleeping Dogs, Hitman: Absolution, Tomb Raider and Bravely Default, Square Enix continues to forecast positive results for the full fiscal year. Elsewhere, the company's arcade game machines and amusement facilities division fell folly to "stagnant market conditions" with operating losses of ¥50 million ($638,750), while both its Publication and Merchandising sectors saw favorable growth, working to slightly offset the aforementioned losses. For the quarter ended June 30, 2012, Square Enix's Digital Entertainment division posted revenues of ¥11.3 billion ($144.8 million), down 3.9 percent year-over-year, and operating losses of ¥111 million ($1.4 million), compared to operating income of ¥2.8 billion ($36.2 million) for the same quarter last year. Overall, the company posted revenues of ¥24.9 billion ($318.3 million), up 1.6 percent compared to ¥24.5 billion ($313.4 million) year-over-year, and losses of ¥2.1 billion ($26.5 million), a swing from profits of ¥690 million ($8.8 million) year-over-year.