Nintendo Profit Rises 72% on Portable DS Player Sales (Update2)

Oct. 26 (Bloomberg) -- Nintendo Co., the world's biggest maker of handheld video-game players, posted a 72 percent gain in fiscal second-quarter profit on sales of the portable DS and the latest ``Super Mario'' software title.

Net income rose to 38.8 billion yen ($327 million) in the three months ended Sept. 30 from a year earlier, in line with the preliminary earnings statement released on Oct. 3. Second-quarter results were derived by subtracting first-quarter figures from the first-half earnings Kyoto-based Nintendo released today.

Nintendo today raised this year's shipment forecast for the touch-screen DS player and software this year, boosted by the popularity of titles such as Nintendogs, an interactive pet game. The company releases the Wii in the U.S. next month, taking on Sony Corp.'s PlayStation 3 and Microsoft Corp.'s Xbox 360 in the home console market.

``The prospect for Nintendo's earnings next year is quite good,'' said Naoki Fujiwara, who oversees $720 million at Shinkin Asset Management Co. in Tokyo. ``The company will most likely enjoy a good start with its release of the Wii console and I'm expecting it to be popular.''

Sales rose 59 percent to 167.9 billion yen in the quarter. Operating profit, or sales minus the cost of goods sold and administrative expenses, more than doubled to 38.3 billion yen from 15.9 billion yen.

`Regardless of Gender'

``Consumers are buying our games, regardless of gender or generation,'' Nintendo said in the statement. ``The video game market is expanding.''

The company on Oct. 3 raised its net income forecast for the year ending March 31, 2007, to 100 billion yen, up from its July forecast for 83 billion yen, and 98.4 billion yen reported a year earlier. The company is basing its forecast on 115 yen to the dollar and 143 yen against the euro.

President Satoru Iwata has been ``successful in expanding Japan's game market by introducing new concepts to games,'' said Yoji Takeda, who helps manage $900 million in Asian stocks for RBC Investment (Asia) Ltd. in Hong Kong.

Nintendo is expecting to ship 20 million DS players this fiscal year, up from its previous projection for 17 million. Shipments of DS game titles will reach 82 million from a July estimate for 75 million.

DS sales for the fiscal first-half exceeded 10 million units worldwide, bringing the total number sold to 26.8 million since the company introduced the player in 2004, Nintendo said.

Wii Console

New titles such as ``New Super Mario Brothers'' sold 6.8 million units, while a ``brain-training'' game sold 4.6 million units in the first half. Nintendo ships about 100,000 DS players a week, which are still being sold out in some Tokyo stores.

Sony last week cut this year's shipment forecast for the PlayStation Portable by 25 percent to 9 million units on slower-than-expected sales.

Nintendo is also seeking to erode Sony's dominant share of the home console market from next month with the introduction of the Wii, which features a motion-sensor remote controller.

The company is forecasting sales of 6 million Wii consoles and about 17 million titles of game software for the player for the year ending March 31, 2007.

The Wii console, which Nintendo will release in the U.S. on Nov. 19 for $250, compares with a $300 starting price for Microsoft Corp.'s Xbox 360 and about $500 for Sony's PlayStation 3. Sony sells its PlayStation 3 on Nov. 17 in the U.S., while Microsoft started Xbox 360 sales last year.

To contact the reporters on this story: Kanoko Matsuyama in Tokyo at at kmatsuyama2@bloomberg.net

To contact the editor responsible for this story: Teo Chian Wei at cwteo@bloomberg.net