Coins DIG

Nintendo Co. said year-end holiday sales were "robust," suggesting that its Wii game console had regained its footing after a slowdown in demand, though a strong yen and price cuts continued to push down the company's profits.

Nintendo said group net income was 192.60 billion yen ($2.14 billion) for the nine months ended Dec. 31, down 9% from a profit of 212.52 billion yen for April-December of the previous year. Revenue fell 23% to 1.182 trillion yen, while operating profit fell 41% to 296.66 billion yen.

To cope with slowing demand for the Wii, Nintendo cut prices by 20% to $200 ahead of the holiday shopping season. Revenue also suffered from a strengthening of the yen against the euro and U.S. dollar, resulting in lower overseas income when converted into yen terms.

The Wii remains the bestselling of the current generation of game consoles, outpacing sales of Microsoft Corp.'s Xbox 360 and Sony Corp.'s PlayStation 3. However, demand started to slow last year and competitors, especially Sony's PS3, are closing the gap.

Nintendo had a strong holiday quarter boosted by the introduction of "New Super Mario Bros. Wii," which sold 10.55 million units world-wide since its November release.

Hiroshi Kamide, analyst at KBC Securities, said that, after a lull in promising new titles, Nintendo can expect brighter prospects with the release of appealing software like the new Mario Bros. game and upcoming sequels of popular game franchises like "Zelda" and "Metroid" later this year.

"It really demonstrates that once Nintendo puts out its own software, its fortunes turn around pretty quickly," said Mr. Kamide.

For its fiscal year ending March 31, Nintendo said it will keep its current forecast for a net profit of 230 billion yen on revenue of 1.5 trillion yen. Analysts polled by Thomson Reuters are forecasting a full-year net profit of 226.52 billion yen.

Nintendo didn't release figures for the quarter ended Dec. 31 Thursday, following the company's usual practice of not doing so until the day after releasing year-to-date figures. Based on Nintendo's results earlier in the fiscal year, its fiscal third quarter results appear to have fallen from the year-ago period but surpassed expectations of a profit of 120.5 billion yen from analysts polled by Thomson Reuters.

The company kept its console sales targets unchanged for the year. It still aims for Wii sales of 20.0 million units. In the last fiscal year, Wii sales totaled 25.95 million units.

It expects Wii software sales to reach 192 million units in the fiscal year from a previous estimate of 180 million, but Nintendo says the rise is the result of how it categorizes software it sells bundled with hardware versus a substantive difference in its view of the market.

Nintendo's DS handheld console sales projection is pegged at 30.0 million units, also unchanged from its previous forecast. It continues to expect DS software title sales of 150 million units.

Source: wsj.com