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Nintendo slashes profit forecast

Company predicts net profit will be $3.5 billion

TOKYO — Game giant Nintendo has followed rival Sony in cutting its 2008 profit forecast — but the result is still well up on the previous year, thanks to strong Wii sales.

Nintendo predicted Thursday that net profit will total ¥345 billion ($3.5 billion) for the fiscal year ending in March, down 16% from its August forecast of $4.2 billion. Even so, the revised estimate would rep a 34% hike on the previous fiscal year.  

The main reason for the change is a rapid strengthening of the yen against the dollar and euro that has sapped Nintendo’s earnings potential. The yen is currently at 98 to the dollar and 129 to the euro, up 14% and 27% for the year, respectively. Nintendo predicts that the yen will slide to 100 to the dollar and 140 to the euro by the end of March.

 The company trimmed its 2008 operating profit outlook by 3.1% to $6.4 billion compared with  $4.97 billion in the previous period. It has left its sales forecast the same at $20.4 billion, up from $17 billion in 2007.

Despite the trims in the profit prognosis, Nintendo reported strong first-half sales, with the popular Wii console moving 10.1 million units for a 38% year-on-year gain.

The DS handheld sold 13.73 million units, 2.8% up over the previous period.

As a result, Nintendo reported $1.5 billion in net profit for April-September, up 9.4% over the previous fiscal first half. 

 Nintendo now estimates that Wii sales will total 27.5 million units in fiscal 2008, up 48% on the previous year. In August the company forecast unit sales of 26.5 million. Nintendo’s sales estimate for the DS remains unchanged at 30.5 million units for a 0.6% year-on-year gain.

Nintendo sold 10.1 million Wii consoles in the first half of fiscal 2008, up 38% year on year.

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