Nintendo's Fiscal First-Half Sales Less Than Predicted

(Bloomberg) -- Nintendo Co., the world's biggest maker of hand-held video games, said fiscal first-half sales unexpectedly fell because it sold fewer GameCube home consoles and less game software in North America.

Revenue for the six months ended Sept. 30 dropped 6.9 percent to 175 billion yen ($1.5 billion), compared with 188 billion yen a year earlier and a May forecast of 190 billion yen, according to a preliminary earnings statement from the Kyoto- based company. Profit rose about 90 percent on currency gains.

Nintendo, which dominated the game console industry in the 1980s, has seen its market share shrink to about 14 percent for its GameCube machine as Sony Corp. and Microsoft Corp. introduce devices with online connections, hard drives and DVD players. Sony is introducing the next PlayStation console next year, which will be 35 times faster than older models.

"GameCube sales have been falling 40 percent year-on-year in the U.S.," said Amir Anvarzadeh, director of Japanese equity sales at KBC Financial Products in London. "You could argue it's one of the worst-performing consoles."

Operating profit, or sales minus the cost of goods sold and administrative expenses, fell to 20 billion yen compared with the May estimate of 30 billion yen and a year-earlier figure of 40 billion yen, said Yasuhiro Minagawa, a company spokesman in Kyoto.

"We will more than likely have to lower our unit sales forecast for GameCube," he said. The company in May said it expects to sell 2.8 million units this fiscal year.

Minagawa said sales of the new Nintendo DS handheld player failed to meet targets in the first half. He said August price cuts and new games helped bring sales back on track.

Profit Doubled

Net income rose to 36 billion yen from the 19 billion yen estimate in May and 46.4 billion yen a year earlier, after the yen weakened more than the company expected. For the year ending March 2006, Nintendo kept its full-year profit forecast at 75 billion yen.

"Offsetting the profit shortfall caused by lower sales, a substantial amount of foreign exchange gain was generated due to the weaker than estimated Japanese yen," the company said in a statement today.

The company had expected the dollar to trade at an average 107 yen during the fiscal first half, against the actual rate of 113.19.

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