Andre
Published:7- 2005
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Nintendo Co. Ltd. reported a 78.5 percent decline in quarterly operating profit on Thursday as a greater proportion of its sales came from low-margin game machines and as development costs rose, but it kept its forecast for a full-year profit increase of 3.1 percent.
Nintendo, known for software titles featuring characters such as Mario, Donkey Kong and Pokemon, is enjoying strong sales of its DS portable game machine, launched late last year, but sold 60 percent fewer GameCube consoles compared with a year earlier.
The company was also hurt during the quarter by a lack of new big software titles. Most of its widely anticipated games such as a new "Legend of Zelda" for GameCube and "Pokemon Diamond/Pearl" for DS in Japan are expected to launch in the second half.
"I think the results came in pretty much as expected," said Yuta Sakurai, senior analyst for Nomura Securities.
"This is a seasonally volatile industry and Nintendo's biggest games will come later in the year. They didn't change their full-year forecast, so I'm not worried," he said.
Nintendo's consolidated operating profit for the April-June first quarter fell to 3.75 billion yen ($33.35 million) from 17.47 billion yen a year earlier.
Last year's results were boosted by strong demand for GameBoy Advance software and GameCube consoles.
Total quarterly sales fell 14 percent to 70.7 billion yen.
"The difference in profitability from a year earlier is due to the fact that it hasn't been long since DS entered markets so costs are still high," said Yoshihiro Mori, senior managing director at Nintendo, adding that it usually takes about a year to benefit from mass production.
Nintendo, which dominates the portable game industry with a roughly 94 percent market share, said it sold 1.38 million DS games in the first quarter.
But rival Sony Corp. is threatening its grip with PlayStation Portable (PSP), which it launched in Japan in December and in the United States in March.
Sony on Thursday raised its full year shipment target for the PSP to 13 million units from 12 million units. Nintendo expects to sell 12.4 million DS game machines in the current year.
Analysts believe Sony's PSP is selling slightly better than the DS in the United States while DS sales are a little stronger in Japan.
Source: Reuters
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