TOKYO (AFP) — Nintendo Co. said Wednesday its quarterly net profit surged one third on fast-growing sales of the hit Wii console, but there were signs that the video game titan's earnings boom may be losing steam.
The company kept its forecast for another year of record net profits, though the heady pace of growth is set to slow as a stronger yen curbs overseas revenues and sales of the handheld Nintendo DS show signs of peaking out.
Nintendo's net earnings rose 33.7 percent to 107.3 billion yen (993 million dollars) in the three months to June from a year earlier -- a robust performance but a far cry from the five-fold surge it reported 12 months earlier.
Operating profit increased by 31.5 percent to 119.2 billion yen as revenue rose 24.4 percent to 423.4 billion yen.
"I would call it a pretty steady performance as opposed to blowing the doors off, which is what we've been used to from Nintendo," said Hiroshi Kamide, an analyst at KBC Securities Japan.
"Their growth rates were unsustainable, so we were expecting things to slow down."
He said the global economic slowdown was keeping Nintendo cautious about the earnings outlook, while it was doubtful whether the upcoming Wii Music, simulating playing in a band, would match the popularity of Wii Sports.
Nintendo said it sold 5.17 million Wii consoles worldwide in the three months to June, up more than 50 percent from a year earlier. In June, Wii become the top-selling video game console in the United States.
But sales of the double-screen portable Nintendo DS slipped to 6.94 million units from 6.98 million in the quarter.
"Obviously Wii demand is extremely strong overseas. But for the first time, we've actually seen DS hardware sales fall year-on-year," Kamide said. "The DS has hit a bit of a high-water mark."
The group kept its forecast for a 26.3 percent rise in net profit to 325 billion yen for the full fiscal year to March and an 8.8 percent gain in operating profit to 530 billion yen, which analysts said could prove overly cautious.
Nintendo, which started out in 1889 making playing cards and brought the world Mario and Donkey Kong, has long dominated the market for handheld machines with its Game Boy and DS series.
Now it has trumped Sony in household consoles with Wii, whose innovative controller can be used to simulate the swinging of a tennis racket or even Harry Potter's wand.
Wii "displayed increasing popularity in North America and Europe," while games such as Mario Kart Wii as well as Wii Fit workout boards -- which can be used for sports and games -- have also sold well, the statement said.
While Sony put the emphasis on chip power and ultra-realistic graphics for the PlayStation 3, Nintendo opted to develop a cheaper, easy-to-use console that would appeal to a wider audience.
Nintendo shares closed up 3.0 percent at 57,800 before the results were released.
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