Nintendo reports 12.5% rise in profit
Nintendo’s profit jumped 12.5% for the fiscal year through March as a foreign-exchange gain and robust sales of handhelds offset shrinking sales of home consoles.
But its share price dropped 7.3% on the Japanese video-game maker’s disappointing forecast for the year ahead.
Net profit at Nintendo Co, which makes Super Mario and Pokemon games as well as Game Boy machines, totalled €688.2m, up from €610.6m the previous year, the company said today.
Fiscal 2005 sales slipped 1.2% to €3.5bn.
Nintendo is forecasting lower profit for the fiscal year ending March 31, 2007, at €453.9m profit, although sales are projected to climb to €4.1bn.
The Kyoto-based company, which did not break down quarterly numbers, said sales of its handheld machines and games did well in fiscal 2005, with hit entries such as Nintendo DS, which has a touch panel and wireless communication capability.
Nintendo racked up a foreign currency gain of €317.7m in fiscal 2005 because of a weaker yen during that period compared to the previous year.
The company’s shares, which have gained about 50% over the past year, plunged 7.3% in Tokyo.
The prediction for lower profit is partly due to expectations for a stronger yen, which erodes the value of overseas earnings.
Nintendo sold more than 16 million Nintendo DS and upgrade Nintendo DS Lite machines worldwide in about 16 months since its launch, the company said.
In Japan, they are selling at a faster pace than any other gaming device ever. Nintendo expects to sell another 16 million of the machines in the fiscal year through March 2007.
Nintendo has taken a different approach from rivals Microsoft and Sony in offering what it calls more intuitive, or easier-to-play, games, such as virtual pets and brain teasers, to attract older people, women and others usually not associated with gaming.
One such game, Nintendogs, which allows players to pet and play with virtual puppies on the screen, sold 6.65 million worldwide.
Nintendo faces tough competition in the video game market against Microsoft’s Xbox 360 home console and market leader Sony’s PlayStation 2 and PlayStation Portable, its first handheld game machine. Sony is also planning an upgrade PlayStation 3, for November.
Microsoft says some 3.2 million Xbox 360 machines have been sold worldwide as of the end of March, since they went on sale late last year. The US software company has sold 24 million of the original Xbox machines, Xbox 360’s predecessor, worldwide.
When combining the original PlayStation and its successor PlayStation 2, Sony Computer Entertainment, Sony’s gaming unit, sold more than 200 million such machines cumulatively so far.
Sales of Nintendo’s home machine GameCube haven’t kept up lately, totalling just 2.35 million consoles for the fiscal year just ended, but the company is planning its upgrade home console, called Wii, for later this year.
Wii has a controller that allows players to use it without manipulating a complex set of buttons, such as swinging it like a fishing rod or a sword. Nintendo said it hopes to sell six million Wii machines in the fiscal year through March 2007.
Nintendo sold 8.3 million Game Boy Advance handheld machines globally in fiscal 2005, adding to cumulative worldwide sales of 75 million.
In fiscal 2005, Sony sold 16 million PlayStation 2 machines, and 14 million PlayStation Portable machines. By the end of March 2007, Sony is targeting sales of six million PlayStation 3 machines.
