Nintendo nets double the dough

Currency exchange gains and strong sales of the DS double Nintendo's profits, but company expects net profit to fall for current business year due to declining GBA and GC sales.

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TOKYO--Nintendo today announced a net profit of 87.42 billion yen ($809 million) for the business year ended March 31, 2005, a figure more than two and a half times that of the 33.19 billion yen ($307 million) earned in fiscal year 2004. Sales kept steady at 515 billion yen ($4.77 billion), while operating profit rose by a small margin of 3.6 percent to 112 billion yen ($1.03 billion). Sales in North America were 257.9 billion yen ($2.39 billion), and sales in Europe were 121.3 billion yen ($1.12 billion). Meanwhile, sales in Japan totaled 132.0 billion yen ($1.223 billion).

Nintendo attributes its profit gain to a strong yen, earning 21.8 billion yen ($202 million) on $5.1 billion in dollar-denominated assets thanks to favorable exchange rates. The company also saw increased profits thanks to the success of its Nintendo DS; the company has sold 5.27 million DS hardware units and 10.5 million software units since the handheld's launch in December. The DS's success came at the cost of Nintendo's other hardware, however, as unit sales of the Game Boy Advance were down by 12.4 percent. However, its game unit sales were up 12.9 percent, thus making up for the fall. GameCube console unit sales were down by 21 percent, while software unit sales were up by a small margin of 1.02 percent.

Nintendo comments that Pokemon FireRed/LeafGreen for the GBA has been one of its major earners for the year, selling more than 6 million units worldwide. In Japan, the Famicom Mini (Classic NES Series) sold particularly well, drawing the attention of lapsed gamers in their late to mid 20s and 30s. On the GameCube, Nintendo sold more than a million units each of Mario Party 6 and Paper Mario: The Thousand-Year Door. The company also sold more than 1 million units of Super Mario 64 DS worldwide.

Looking ahead into the current business year starting April 1, Nintendo expects a net profit of 75.0 billion yen ($694 million), sales of 520.0 billion yen ($4.81 billion), and operating profit of 115.0 billion yen ($106 billion). Nintendo forecasts that sales of its DS hardware units will more than double to 12.4 million units for the year. Nintendo has said it expects DS game sales to increase by 250 percent, to 35 million units.

However, Nintendo's DS sales won't be enough to balance the expected decline in its other platforms. The company expects unit sales for its GBA hardware to decline by 33.8 percent, from 15.4 million to 10.2 million units, and GBA software sales are expected to plunge 40 percent, from 85 million units to 50 million units. Sales of GameCube consoles are also expected to decline by 28.6 percent, from 3.9 million units to 2.8 million units, and its game sales are expected to drop from 48.4 million units to 34.5 million units.

With those estimated unit sales figures and its Revolution console not arriving until spring of 2006, Nintendo expects its net profit for the current business fiscal year 2006 to fall by 14 percent.

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