Profits nearly double at Nintendo

Nintendo released its financial report for the first fiscal quarter today, and the report showed that the company's profits had nearly doubled compared to last year. The Japanese game giant attributes its strong numbers to rising software sales and a solid showing by the Game Boy Advance. In addition, Nintendo expects the release of its new handheld, the DS, to drive sales through the rest of the fiscal year.

Kyoto, Japan-based Nintendo reported earnings of 22.6 billion yen ($204 million) during the three-month period ending June 30, compared to 11.5 billion yen ($103 million) over the same period in 2003. Sales of game software rose 11 percent to 42 billion yen ($375 million), contributing to most of the company's profits.

The main support came from Nintendo's handheld, however. While revenues from hardware sales fell overall--some 13 percent to 39.5 billion yen ($353 million)--the company still sold 2.3 million GBAs during the first fiscal quarter, helping bolster hardware sales as the GameCube and, more imminently, the GBA head into the end of their development cycles. Furthermore, Nintendo was able to cut production costs on its platforms 21 percent compared to last year.

Looking ahead, the company is counting on its new handheld device, the DS, to post big numbers when it debuts in Japan and the US before the end of 2004. More than 120 games are in development for the platform, with 20 of them coming from Nintendo. "The Nintendo DS will change the future of handheld gaming," said Nintendo president Saturo Iwata.

The company expects its first quarter trends to continue, with sales of the DS and games doubling profits for the entire fiscal year. Nintendo currently has a stranglehold on the $4 billion handheld game market with a 95 percent market share. "People continue to underestimate the power of the Nintendo brand and its huge loyalty," comments game industry analyst P.J. McNealy. "They're [Nintendo's] putting up strong results."