UPDATE 3-Nintendo Q4 profit soars on DS, more growth ahead
(Adds more president quotes, analyst comments)
OSAKA, Japan, April 26 (Reuters) - Japanese video game maker Nintendo Co. Ltd. (7974.OS) scored a nearly eightfold rise in quarterly operating profit on vigorous sales of its DS handheld games, and forecast stronger than expected growth this year.
Operating profit at Nintendo, known for such game characters as Mario, Donkey Kong and Pokemon, jumped to 58.4 billion yen ($489.8 million) in January through March, according to a Reuters calculation based on the full-year figures which the company released. That compared with 7.6 billion a year earlier.
"It's a stunning result," KBC Securities analyst Hiroshi Kamide said. "It's phenomenal what they've managed to achieve in the last 12 months."
Nintendo, which competes with Sony Corp. (6758.T) and Microsoft Corp. (MSFT.O) in the video game market, forecast a record operating profit of 270 billion yen for the current year to March 2008 -- higher than the consensus of 253.4 billion yen in a poll of 18 analysts by Reuters Estimates.
Sales have been boosted by the DS machine which offers intuitive, easy-to-play games such as the "Nintendogs" pet training title and has helped expand the gaming population beyond the hardcore user base of young men to include women and the elderly.
Aiming to repeat its success in the handheld game market in the console business, Nintendo also launched the Wii late last year. The machine has outsold Sony's PlayStation 3 in Japan and the United States, threatening the electronics maker's dominance in the $30 billion global game industry and providing Nintendo with another growth driver.
Nintendo said it aims to more than double its Wii sales to 14 million units in the current business year from 5.84 million a year earlier.
The Kyoto-based company added that it is targeting DS handheld game sales of 22 million units this year, compared with 23.56 million in fiscal 2007.
"We sold 9.12 million units of DS hardware in Japan last year when it is considered a great success if you sell 6 million units of game hardware," Nintendo President Satoru Iwata told reporters.
"We cannot make our business plan on the assumption that this extraordinary situation will continue this year, although modest DS growth in the United States and Europe can be expected," he said.
Iwata said Nintendo aims to double its combined annual Wii and DS software sales to 300 million units from last year's levels, without giving a specific time frame.
"As a mid-term target it would be appropriate for us to establish a market in which we can sell about 300 million units of DS and Wii software," he said.
"Normally, January-March is a slow quarter and sales slacken," he said, "But in the latest quarter, both the DS and Wii maintained their momentum. In particular, DS and Wii software sales far exceeded our expectations".
Sales in the latest quarter totalled 253.9 billion yen, compared with 96.9 billion a year earlier.
Few analysts give their estimates for Nintendo's quarterly performance.
The result comes after Nintendo raised its outlook for the year ended March 31 for the fourth time earlier this month, citing brisk demand for the DS and foreign exchange-related gains.
Prior to the announcement, shares in Nintendo closed up 0.3 percent at 37,200 yen, underperforming the Nikkei average's .N225 1.1 percent gain. Nintendo shares have nearly doubled in the past business year while the Nikkei put on 1.3 percent. (Additional reporting by Nathan Layne)
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