Aug. 29 (Bloomberg) -- Nintendo Co. raised its full-year profit forecast by 26 percent because of higher-than-anticipated sales of Wii and DS game players, sending the company's shares to their biggest gain in nine months.

Net income will climb 59 percent to 410 billion yen ($3.8 billion) in the year ending March 31, the Kyoto-based company said today. The guidance exceeded the 382.6 billion yen median of 23 analyst estimates compiled by Bloomberg.

Nintendo, poised to pass Sony Corp. as the world's largest maker of game players for the first time in at least 13 years, said sales of its Wii console will rise 42 percent this year and reversed projections that DS sales will drop. Before today, the stock had fallen 17 percent since July 30, when the company left its full-year projections unchanged.

``This is a very big, positive surprise,'' said Koichi Takatsuka, a senior fund manager at United Investments Co. in Tokyo. ``It looks like Wii and DS are selling well, especially in Europe.''

Nintendo gained 8.4 percent to close at 51,800 yen on the Osaka Securities Exchange, the most since Nov. 14. The company, which gets almost 80 percent of revenue from overseas, also said the weaker yen will help earnings.

On July 31, Nintendo's stock tumbled by its daily limit of 5,000 yen in Osaka trading after the company left its annual projections unchanged. The 8.7 percent drop was the biggest decline in six months for a company that raised its forecast three times in the previous 12-month period.

More Valuable Than Sony

The stock has tripled since Satoru Iwata, 48, replaced Hiroshi Yamauchi as president in 2002. Nintendo is now valued at $67 billion, 72 percent more than Sony's market capitalization, according to data compiled by Bloomberg.

The Wii overtook Microsoft Corp.'s Xbox 360 in June as the leading game player in U.S. homes among the latest generation of consoles, researcher NPD Group Inc. said July 17. U.S. sales of Nintendo's machine have surpassed that for the Xbox 360 and PS3 every month but one since it went on sale, according to NPD.

Nintendo said today that sales of the Wii, equipped with a motion-sensing controller that can be swung like a bat, will probably climb to 26.5 million players this year, exceeding the July forecast for 25 million. Sales of software for the console will increase 56 percent to 186 million units, the company said.

Nintendo also said it will probably sell 30.5 million touch- screen DS players, 8.9 percent higher than its July estimate of 28 million. Sales of game titles are estimated to climb 6.1 percent to 197 million units.

Rival Machine Sales

Sony forecasts it will sell 10 million PlayStation 3 consoles and 15 million PlayStation Portable devices in the year ending March 31.

Nintendo said it was assuming an exchange rate of 105 yen to the dollar and 160 yen to the euro for its forecasts, compared with a previous projection of 100 yen and 155 yen.

The Japanese currency, which traded at an average of 105.7 to the dollar this year before today, may trade at 108 yen by the fourth quarter, according to the median of 34 estimates compiled by Bloomberg.

Nintendo increased its projection for operating profit, or sales minus the cost of goods sold and administrative expenses, by 23 percent to 650 billion yen. The company bolstered its revenue forecast by 11 percent to 2 trillion yen.

To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net; Mari Murayama in Tokyo at mmurayama@bloomberg.net

Last Updated: August 29, 2008 06:52 EDT