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Nintendo Takes Profit Hit

Reuters and other news agencies have reported out of Japan that Nintendo's net profit has fallen 43 percent in the latest quarter, and that the videogame maker has also cut its forecast for the full year by more than one fifth, citing a strong yen and weak sales of the GameCube.

Shares of Nintendo ended 2.3% lower in Japan today after it informed -- and suprised -- the market with the new lower forecast, reverting to a figure that was issued before an upward revision last November.

It wasn't all bad news, as Nintendo did raise its sales forecast for its new Nintendo DS handheld by 20%. Nintendo expects 6 million units of the DS to be sold by March 2005. However, they also slashed forecasts for the DS software by a third.

Yoshihiro Mori, Nintendo's Senior Managing Director laid out some reasons as to the cut in DS software projections. "DS software is not selling because users are playing the pre-installed PictoChat game. Even if they buy a game, multiple players can use it to play against each other, eliminating the need for each to buy their own game. We also included a demo game with the DS machine in the United States, and pushed back some game releases into the next business year."

Despite all the news, analysts still expect Nintendo to post an operating profit of 120 billion yen (about US$1.17 billion) and a net profit of 74.2 billion yen (about US$720.8 million), according to Reuters estimates. As Hiroshi Kamide, a Tokyo-based analyst with KBC Securities says, "It's not the end of the world by any means, If everything stays equal, they'll beat their full-year profit forecast"

Click on the link below to read the full article in its entire detail. GCAdvanced will keep you updated on Nintendo's financial situation as we continue into the new year.