Nintendo sales, profit beat forecasts on DS

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TOKYO -- Japanese video game maker Nintendo Co. raised its sales and profit forecasts for the fourth time on Thursday for the business year just ended, thanks to robust demand for its DS hand-held games, sending its shares higher.

Nintendo's strategy to broaden the overall game-playing population paid off handsomely with the DS as well as its new game console, the Wii, proving a smashing success. Both the DS and Wii focus on intuitive, easy-to-play games.

The company said sales totaled about ¥966 billion yen ($8.1 billion) for the year ending March 31, up from its previous forecast of ¥900 billion, and compared with a consensus of ¥929 billion in a poll of 17 analysts by Reuters Estimates.

The Kyoto-based company, known for such game characters as Mario and Pokemon, did not give specific figures for its profits but said it also is likely to have exceeded its prior projections.

In its third earnings revision for the year, announced in January, Nintendo said it expected an operating profit of ¥185 billion and net profit of ¥120 billion, both of which would already be record numbers.

It plans to report actual profit figures when it announces its annual earnings April 26.

"Merchandise does not move in the January-March quarter -- that is the norm in this industry," Nintendo spokesman Yasuhiro Minagawa said. "But ours somehow did."

Nintendo enjoyed strong demand for its long-running in-house software like "Nintendogs" from new DS users globally.

In "Nintendogs," players can adopt a dog, give it a name, walk it, talk to it and teach it tricks to win an obedience contest, spending only a few minutes at a time.

Eight of the 10 best-selling game software titles in Japan were meant for the DS in the past business year, including "New Super Mario Bros.," according to video game magazine publisher Enterbrain.

In January, Nintendo forecast DS sales of 23 million units in the 2006-07 business year, more than doubling expected shipments of Sony's rival hand-held gear, PlayStation Portable, for the same period, and DS software sales of 100 million.

Actual DS hardware and software sales have likely exceeded these targets in the year to March, Minagawa said.

In order to better compete with the DS, Sony cut the price of the PSP in North America by 15% or $30 to about $170 earlier this week. The DS retails for about $150.

Aiming to repeat its success of the DS in the console market, Nintendo launched the Wii in November. The device features a motion-sensitive controller that allows users to direct onscreen play by swinging it like a tennis racket or wielding it like a sword, opening a new avenue of game playing.

Nintendo sold more than twice as many Wii consoles in Japan and the U.S. in February as Sony's competing PlayStation 3. Minagawa said Nintendo has likely achieved its target to sell 6 million Wii consoles by March.

"It is clear the Wii is the initial winner in the console battle, but nobody knows how long things stay that way," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

"I would like to wait and see what kind of strategy -- pricing strategy in particular -- Sony will take in its effort to catch up."

The basic version of the PS3 costs twice as much as the Wii.

Nintendo also said Thursday that it now expects a foreign exchange-related profit of ¥20 billion for the 2006/07 business year, rather than its previous forecast of a ¥10 billion loss.

Following the midday announcement, shares in Nintendo erased a morning loss and closed up 2.1% at 34,350 yen, outperforming the Nikkei average, which lost 0.3%.

The stock has nearly doubled during the past 12 months, while the Nikkei remained virtually flat.
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