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Nintendo's profit hit by sales slowdown, strong yen
Thu May 22, 8:43 AM ET Add Technology - AFP to My Yahoo!
TOKYO (AFP) - Japan's top video game maker Nintendo (news - web sites) said its net profit was depressed by a sales slowdown and the yen's strength in the year to March while its rivals faced mixed fortunes counting on hit software.
Nintendo, the maker of popular hand-held Game Boy Advance and home-use Gamecube consoles, reported a group net profit of 67.3 billion yen (560 million dollars), down 36.8 percent from a year earlier.
It ended a two-year run of record net profits, which had been bolstered by brisk sales of consoles and software titles.
Nintendo's recurring profit fell 49.1 percent to 95.0 billion yen on sales worth 504.1 billion yen, up 9.1 percent, Nintendo Co. Ltd. said in a statement. Overseas sales accounted for 74.8 percent of the total.
The creator of the popular Super Mario software has been locked in a price war around the world with Microsoft's Xbox (news - web sites) console and Sony's PlayStation2 (news - web sites).
Last month, Nintendo slashed its earnings forecast after worldwide sales of Gamecube consoles and software were hit by the popularity of PlayStation2.
For the year to March 2004, the group's net profit is forecast to edge down 3.4 percent to 65 billion yen while recurring profit is estimated at 110 billion yen, up 15.7 percent.
Its sales are forecast to expand 9.1 percent to 550 billion yen.
"Software publishers began to reorganise their business to cope with a commercial environment that had become even more severe," the statement said.
"Software titles had increased, pushing development costs and advertisement costs up," Nintendo said, adding that "sales concentrated only around a handful of hit titles."
The group's sales of game consoles tumbled 13 percent to 275.2 billion yen and those of game software lost four percent to 227.1 billion yen.
The stronger-than-expected yen in the year affected the group's income before taxes while its net profit was bolstered by sales of shares in affiliates, the statement said.
Nintendo's foreign exchange losses totaled 22.6 billion yen in the year.
The company said that for the current year it would develop game software which can be played with both Gamecube and Game Boy consoles.
It added that its board of directors had approved a share buyback program of up to 14 million shares for 110 billion yen.
On Monday rival Sega reported a return to the black for the first time in six years -- with a group net profit of 3.1 billion yen -- thanks to the success of its gaming arcade equipment businesses and stock sales.
But its recurring profit dropped 37.6 percent, mainly due to the failure of its American football game title in the United States.
Sony's game division reported last month its operating profit jumped 35.9 percent to 112.7 billion yen, due to brisk sales of consoles in the United States and Europe, an increase in best-selling software and a cutback in semiconductor costs.
Also reporting results Thursday, Konami Co. Ltd. incurred a group net loss of 28.52 billion yen, compared with a net profit of 11.4 billion yen in the preceding year, despite brisk sales of soccer game software following Japan's co-hosting of the World Cup finals last year.
Under US accounting standards, it had to write down the value of a fitness club business run by a sport subsidiary.
Namco Ltd. said Wednesday its net profit doubled to 4.1 billion yen, on brisk sales of software for
a game in which the player beats drums to music (which game is this btw??).