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Nintendo Profit Jumps 60% on Wii Boom

Japan's Nintendo, maker of the hit Wii game machine, said on Thursday fourth-quarter profit jumped 60 percent but it forecast only modest annual growth of 9 percent as sales of its DS handheld machine slow.

Nintendo
CNBC.com
Nintendo

The conservative projection comes despite a jump in sales for the Wii console, which has so far outsold Sony's PlayStation 3 and Microsoft Corp's Xbox 360 since its launch in late 2006.

Kyoto-based Nintendo said operating profit for the January-March quarter surged to 93.2 billion yen ($900 million), handily beating a Reuters Estimates consensus of 82 billion yen from 19 analysts.

But the company, valued at around $81 billion, expects profit to climb to 530 billion yen this business year, 6 percent below the average analyst estimate of 566.5 billion yen.

"The numbers themselves are a bit of a disappointment," said KBC Securities analyst Hiroshi Kamide.

Analysts have said Nintendo's wildly popular Super Smash Bros.

Brawl fighting game and the imminent launch outside Japan of the Wii Fit home fitness programme are expected to drive sales and help Nintendo shrug off unfavourable currency rates.

While Sony's PS3 may gain momentum on the back of new software titles and its Blu-Ray capability for next generation high definition movie discs, that is seen having little impact on sales of the Wii, which is targeted at a different market.

Nintendo said revenue should increase 8 percent to 1.8 trillion yen and forecast global Wii sales would increase 34 percent to 25 million units this business year, while targeting a 48 percent jump in software sales to 177 million units.

It also said it may ramp up Wii monthly production capacity to 2.4 million units by summer from 1.8 million units currently.

But it said annual sales of its DS handheld player would likely fall to around 28 million units from 30.3 million.

Microsoft reports its third-quarter earnings later on Thursday, while Sony's annual results are due on May 14.

Nintendo shares have fallen 12 percent so far this year in line with a drop in the Nikkei average, but have gained more than 60 percent in the past 12 months.

The stock closed down 1.4 percent at 57,900 yen on Thursday ahead of the results.

The Nikkei fell 0.3 percent.