July 25 (Bloomberg) -- Shares of Nintendo Co., the world's biggest maker of handheld video game players, climbed to a 4 1/2- year high after the company raised its forecast for earnings as sales of the touch-screen DS device jumped.

The stock jumped 4 percent to 21,680 yen as of the 3 p.m. close on the Osaka Securities Exchange, its highest since Jan. 21, 2002. Net income will probably be 83 billion yen in the year started April 1, the Kyoto-based company said yesterday, increasing its forecast from 65 billion yen.

Nintendo raised its outlook for sales of DS hardware and software as ``New Super Mario Bros'' became the top-selling U.S. title in June and ``Brain Age'' took the No. 3 spot. The company will be able to introduce more innovative games in the fourth quarter, when it releases the Wii home console that features a motion-sensitive controller.

``Nintendo DS sales are strong in Japan and Europe and have turned up in the U.S. market, which had been a cause for concern,'' Atsuko Kaneko, an analyst at UBS Securities Japan Ltd., wrote in a report dated yesterday. ``The upswing in DS sales in the U.S. could also be a positive for sales of the Wii, which features a unique input device.'' She rates the shares ``buy.''

Outselling PSP?

The company targets 17 million DS device sales this year, compared with the 12 million PlayStation Portable handhelds forecast by Sony Corp. in April. The outlook for DS sales was raised from the previous estimate of 16 million units, the company said yesterday, when it reported earnings for the three months ended June 30.

Nintendo's DS games, which include touch-screen components like stroking a virtual pet, are aiming for a wider audience than just ``shooter'' game fans. The latest Mario game pushed ``Grand Theft Auto: Liberty City,'' for Sony's PlayStation 2, into the U.S. No. 2 spot in June. Nintendo is aiming at a similar market for the Wii, whose controller can be swished like a sword and the movement will appear on the screen.

The strategy helped boost DS sales to about 600,000 last month in the U.S., surpassing that of all other game devices, the company said on its Web site. Three of the top 10 selling U.S. videogames in June were for the DS player, including ``Big Brain Academy,'' the eighth-best seller.

Revenue will probably climb to 640 billion yen in the year started April 1, compared with the company's previous forecast for 600 billion yen, helped by the outlook for a 40 billion yen gain from exchange rate fluctuations.

Nintendo shares have gained 46 percent this year and were the best performers in the MSCI Japan/Information Technology Index of 54 companies.

To contact the reporters on this story: Hiroshi Suzuki in Tokyo at Hsuzuki5@bloomberg.net; Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net

Last Updated: July 25, 2006 03:01 EDT