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Nintendo Profits Fall; Analysts Largely Unconcerned

Officials from Japanese-headquartered gaming giant Nintendo have reported the company’s financial results for the first quarter ended June 30th, and during the period, th...
Officials from Japanese-headquartered gaming giant Nintendo have reported the company’s financial results for the first quarter ended June 30th, and during the period, the company saw profits fall a notable 78.5 percent compared to the same time last year, though the company did not change its positive outlook for the entire year. The company’s worldwide profit for the year's first fiscal quarter fell to ¥3.75 billion ($33.34m) for the quarter, down from ¥17.47 billion ($155.34m) a year earlier. Total quarterly revenue also decreased, albeit less severely, by 14 percent to ¥70.7 billion ($628.5m). The company has blamed the results on a decrease in demand for Game Boy Advance software and GameCube consoles, with GameCube hardware sales down 60 percent on last year. Despite the apparently significant downturn in results both the company and independent analysts contacted by news agency Reuters appear unconcerned by the results, with Nintendo’s share price falling by only 0.1 percent in initial post- trading. "I think the results came in pretty much as expected," said Yuta Sakurai, senior analyst for Nomura Securities. "This is a seasonally volatile industry and Nintendo's biggest games will come later in the year. They didn't change their full-year forecast, so I'm not worried," he said. "The difference in profitability from a year earlier is due to the fact that it hasn't been long since DS entered markets so costs are still high," said Yoshihiro Mori, senior managing director at Nintendo in comments to the press, adding that it usually takes about a year to benefit from mass production. Japanese analysts have also suggested that the results are merely indicative of the end of the current generation of consoles. Although the PlayStation 2, at least, is expected to have considerable life left in it, the release of The Legend of Zelda: Twilight Princess this Christmas is arguably the only triple A product left in the GameCube’s forthcoming line-up. However, though down from last year, Nintendo’s profit-making capabilities are still in sharp contrast to the continued losses being made by Microsoft on the Xbox, and by Sony overall. Nintendo officials claim that operating profits for the whole year are expected to rise by 3.1 percent from ¥111.52 billion ($991.73m) last year to ¥115 ($1.02bn) this year.

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