Nintendo profits spike on DS success

White-hot handheld sales raise game giant's quarterly earnings 85 percent, profits 10.2 percent; 21 million units of dual-screen handheld now sold worldwide.

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When Nintendo unveiled the Nintendo DS at the Electronic Entertainment Expo 2004, skeptics dismissed it as a mere gimmick. Just over two years later, the company has sold over 21 million units of the dual-screen handheld. During its first fiscal quarter, which ended on June 30, 2006, the company sold nearly 4.54 million DSs, up from 1.38 million during the same period in 2005. The DS sales figures included sales of the new DS Lite, which launched successfully in the US and Europe during the quarter, and has been a hot-ticket item in Japan since it went on sale there in March.

Spurred on by the DS Lite's success, Nintendo has announced robust earnings. Its total FY Q1 revenue was 130.9 billion yen ($1.1 billion), a massive 85 percent increase from the 70.7 billion yen ($605.9 million) it took in from April to June 2005. The company's net income--that is, profit--was 15.6 billion yen ($133.6 million) for the quarter, a 10.2 percent increase over the 14.1 billion yen ($120.8 million) profit it reported during the same period the previous year.

The results have caused Nintendo to reevaluate its estimates for the rest of its financial year, which ends on March 31, 2007. The company has raised 12-month revenue projections for the year from 600 billion yen ($5.14 billion) to 640 billion yen ($5.48 billion), up from its 509 billion yen ($4.36 billion) FY 2005 revenues. Annual profit forecasts have increased from 65 billion yen ($557 million) to 83 billion yen ($711 million). However, that figure is below the 98.4 billion yen ($843.4 million) profit it recorded the previous year.

As for the DS, the company now expects to sell 17 million units during its 2006 fiscal year, up from the previous estimate of 16 million. Software forecasts have also been revised from 70 million to 75 million DS games for the 12-month period.

Nintendo's other handheld, the Game Boy Advance, is starting to show its age. The portable sold some 680,000 units from April to June, versus 980,000 during the same quarter in 2005. To date, though, GBA sales dwarf that of its successor, with 75.8 million units sold worldwide--a figure the company predicts will reach 77.6 million units by March 2007.

Sales of Nintendo's aging GameCube console also fell, going from 260,000 units during the second calendar quarter of 2005 to 150,000 units during the same three months in 2006. That said, the Japanese game giant is much more bullish about its next-gen console, the Wii. Nintendo predicts that it will sell 6 million units of the console between the time it goes on sale this fall and March 2007, with some 17 million Wii games being sold during the same period.

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