Nintendo sales down, profits up

TOKYO--Nintendo posted its financial results today, and it turns out the company has been making more money while selling fewer games.

Nintendo today reported its consolidated results for the nine-month period ended December 31, 2005. For the time frame, the company's bottom line improved considerably, as its net income increased to 92.2 billion yen ($792 million) over the 67.8 billion yen ($583 million) it reported for the same period a year before. Despite that improvement, Nintendo's net sales were down 1.7 percent from the preceding year to 412 billion yen ($3.54 billion), hurt by declining sales of GameCube and Game Boy Advance hardware and software lines.

GBA sales were particularly hard hit. Nintendo moved less than 7.5 million Game Boy Advance, SP, and Micro units for the time frame, down from 14.3 million for the same time frame a year before. Sales of GBA games were also hit, down to 51 million from the previous year's 73 million. Likewise, the GameCube saw its sales drop from 3.46 million units to 2.16 million units, while game sales for the system slid from 40 million units to 28 million units.

Helping to offset the decline of the company's older systems, Nintendo's DS sold 9.16 million units during the nine-month period. That's up from the 2.84 million sold the previous year, a less-than-meaningful comparison considering the machine launched near the end of that time frame. The DS also saw game sales of 35.9 million for the period, far outstripping the 5 million units it moved the year before.

While Nintendo also today unveiled the Nintendo DS Lite redesign, which will go on sale March 2, several days before the end of the company's fiscal year, it apparently had the unit in mind when it made its initial DS hardware projections, as they have not changed. The company still expects to sell 12 million DS systems for the fiscal year ending March 30, 2006.

As strong as the DS's numbers were, the key to Nintendo's bolstered net income was not its game sales. The company cited foreign exchange gains of 45.2 billion yen ($388 million) thanks to the increasing value of its foreign assets compared against the yen. While that puts Nintendo ahead of the game in its financial report, it should be noted that the company's operating income (calculated before foreign exchange gains, ancillary income and expenses, and taxes) was down 20 percent, from 103 billion yen ($885 million) to 83 billion yen ($713 million).