Nintendo Raises Profit Forecast on Sales of Wii, DS Players

Nintendo Co., maker of the top- selling Wii game console, raised its annual earnings forecast to a record after reporting first-quarter profit surged fivefold as the company widened its lead over Sony Corp.'s PlayStation 3.

Net income climbed to 80.3 billion yen ($668 million) in the three months ended June 30, from 15.6 billion yen a year earlier, the Kyoto, Japan-based company said today. Nintendo raised its profit forecast for the year ending March 2008 to a record 245 billion yen, 41 percent more than its April projection.

Nintendo, whose market value doubled last year, plans to build on the success of the Wii's motion-sensor remote controller with new products including a steering wheel and exercise pad. The company today increased its Wii sales target by 18 percent to 16.5 million consoles this fiscal year, compared with Sony's shipment forecast for 11 million PlayStation 3s.

``Nintendo continues to knock the cover off the ball in the video-game market,'' Daniel Ernst, a New York-based analyst at Soleil Securities Corp. with a ``buy'' rating, said prior to the earnings release. ``Nintendo not only creates great hardware that is low-cost to make and easy to play, but also great software.''

Sales, also driven by the DS portable and the ``Mario'' games series, more than doubled to a record 340.4 billion yen. Operating profit, or sales minus the cost of goods sold and administrative expenses, tripled to 90.6 billion yen.

Revenue will reach 1.4 trillion yen this fiscal year, 45 percent more than the April estimate, the company said. Sales of Wii software titles will rise to 72 million units, compared with an April forecast for 55 million. Nintendo plans to sell 140 million games for its DS portable, up from 130 million.

Six of the top 10 selling games in the U.S. in June were made for Nintendo's game systems, with ``Mario Party 8'' leading the pack, according to NPD Group Inc.

Record Share Price

Shares of Nintendo, the world's largest maker of handheld players, rose 3.5 percent to a record 56,800 yen on the Osaka Securities Exchange. The stock has gained 83 percent this year, compared with a 4.3 percent advance in the Topix index.

``The earnings results and upward revision have already been largely factored into the share price,'' said Junichi Misawa, who oversees $655 million including Nintendo stock at STB Asset Management Co. in Tokyo. ``The overall trend for the stock remains positive.''

Nintendo today raised its full-year dividend to 960 yen, up 37 percent from its previous plan.

The company revised its outlook on the yen projecting the Japanese currency to trade at an average 118 yen against the dollar and 155 yen to the euro this fiscal year, compared with 115 yen and 150 forecast in April. The yen traded at 118.05 per dollar and 157.33 against the euro as of March 31.

Demand for the Wii will probably continue to exceed supply this Christmas season, Nintendo said earlier this month. Tokyo- based Sony earlier this month offered a discount on the PlayStation 3 and Microsoft Corp. is considering a price cut for the Xbox 360 to catch up with Nintendo.

Leading the Pack

The PlayStation 3, launched in late November, was outsold by the Wii by two to one in the U.S. as of May, according to Port Washington, New York-based NPD Group. In Japan, the margin is three to one, researcher Enterbrain Inc. in Tokyo said.

Nintendo's two-year-old handheld DS player, its best-selling machine, uses a stylus instead of button controls, making it easier for users to play Frisbee with their virtual pets, practice calligraphy and draw pictures. Nintendo is also capturing an older audience with a ``brain-training'' game and tutorials for cooking and languages.

Hit DS game titles include ``New Super Mario Bros.'' and ``Brain Age,'' a quiz game designed to test mental agility. Titles for the Wii include ``Wii Sports'' and the role-playing ``The Legend of Zelda: Twilight Princess.''
Source :http://www.bloomberg.com