Nintendo lifts profit, shares soar (Reuters)

Friday, August 29th, 2008 | Finance News

TOKYO (Reuters) -
Nintendo Co boosted its annual profit
outlook by 23 percent on white-hot demand for its Wii video
game console and DS portable player, beating market
expectations and sending its shares more than 8 percent higher.

As consumers in the United States and Europe snap up its
game machines, Nintendo hiked forecasts for the Wii 6 percent
and for the DS 9 percent, pushing the company to the limits of
current production capacity.

"The fact that Nintendo is confident to say even before the
end of the first half, that overseas sales are this strong,
will likely help the stock ride a wave towards the Christmas
shopping season," said Koki Shiraishi, an analyst at the Daiwa
Institute of Research.

The Wii, launched in late 2006, has far outsold Sony's
PlayStation 3
and Microsoft's Xbox 360 in the $57 billion video
game industry, thanks to its easy-to-learn motion-sensing
controller, low price and innovative titles like the "Wii Fit"
exercise game.

Nintendo said it now expects an operating profit of 650
billion yen ($6 billion) in the year to March, up from its
previous forecast of 530 billion yen, also helped by a softer

It sees sales of 2 trillion yen, 11 percent higher than its
previous estimate.

The new profit forecast trounced a Reuters Estimates
consensus of 605 billion yen from 20 analysts.

Nintendo's shares rose by their daily limit of 4,000 yen to
close at 51,800 yen, outperforming a 2.4 percent climb for the
Nikkei benchmark

The stock's value grew more than five-fold in the two years
through October 2007, spurred by strong sales of the DS and
Wii, Nintendo's twin growth engines.

But it has lost 28 percent since then due to investor
concerns that its break-neck growth may be slowing.

The company lifted its annual dividend forecast to 1,680
yen, up from the 1,370 yen it had expected in April. It also
lifted its half-year operating profit estimate by 17 percent to
245 billion yen.

Nintendo's robust sales underscores the video game sector's
resilience in the face of soaring oil prices and sluggish
consumer spending which have hurt industries such as autos.

"Games aren't all that expensive, so they're appealing even
now. Something like a car, of course, is quite different,"
Shinkin Asset Management fund manager Tomomi Yamashita said.

By contrast, Toyota Motor Corp cut its 2009 vehicle sales
forecast on Thursday.

Nintendo said it now aims to sell 26.5 million Wii consoles
and 30.5 million DS players this business year.

(Additional reporting by Elaine Lies and Kiyoshi Takenaka;
Editing by Edwina Gibbs)