Nintendo Rides DS Handheld to Higher Profits

Japanese game maker Nintendo on Thursday posted a 40% rise in quarterly profit, driven by blistering sales of its DS handheld machine, and stood by its forecast for record-setting annual earnings.

Its strategy to broaden the game population beyond young males to women and the elderly was a huge success as the DS, characterised by its ease of use and innovative game software such as "Brain Age" and "Nintendogs", saw strong demand globally.

The strong results came as little surprise after Nintendo, which competes with Sony and Microsoft in the $30 billion video game industry, earlier this month raised its outlook for the year to March for the third time.

The company, which saw a solid debut of its new Wii game console late last year, kept unchanged its latest net profit forecast of 120 billion yen ($990.5 million) for the year to March, up from a profit of 98.38 billion yen a year earlier.

The outlook compares with the consensus of a 126.6 billion yen profit in a poll of 12 analysts by Reuters Estimates. It also maintained its annual operating profit forecast of 185 billion yen, which would be more than double its 90.35 billion yen profit a year ago.

The DS, which opens like a book and lets users control the game by simply touching the screen with a stylus, is expected to get a further boost this year as game software maker Square Enix launches the latest version of its popular Dragon Quest games for the Nintendo machine.

Net profit in October-December rose 39.6% year-on-year to 77.57 billion yen, according to Reuters' calculations. Nintendo only announced results for April-December -- the first nine months of its business year.

Operating profit in the three-month period came to 100.52 billion yen, up 59.1% on the year, while sales grew 75.3% to 413.77 billion yen.

Prior to the announcement, shares of Nintendo closed up 1.2% at 33,550 yen, while the benchmark Nikkei average fell 0.28%.

The stock has gained 76% in the nine-month period to December 2006, far outperforming the Nikkei's 1 percent gain. ($1=121.15 Yen)