Pokemon fails to save profits

Nintendo has said that the strong yen drove its profit down nearly 70 per cent in the half year to September, despite a worldwide craze for its Pokemon video games.

The leading Japanese game-making company said its parent-only current profit dropped to 20.2 billion yen (€185 million) in the six-month period from 63.04 billion yen in the same period a year ago, while sales slipped 5 per cent to 190.2 billion yen from a year ago.

The half-year results came days after the video game giant launched new Gameboy handheld machine software for its blockbuster Pokemon game series in Japan.

The Pokemon (an abbreviation of "pocket monster") series has a massive and near-fanatical following among children, even spawning a motion picture - Pokemon: The First Movie - which generated a record $32.4 million (€31 million) in US box office receipts over the second weekend in November.

But the Pokemon sensation was more than offset by some 51.7 billion yen in foreign exchange losses caused by the stronger yen, which reduces the yen-based value of the firm's profits earned abroad and assets held in foreign currencies.

In the same period a year ago, Nintendo posted an 8.5 billion yen profit on foreign exchange.

Analysts also blamed a slowdown in global shipments of its Nintendo64 video game console, which totalled 4.62 million units over the period. Nintendo rival Sony Corp's game unit said last month it shipped 10.79 million of its PlayStation game players worldwide in the first six months.

Sony Computer Entertainment and Nintendo are battling for top spot in the lucrative video game market, which is on track to generate revenues of about $7.4 billion in 1999 in the US alone.

"The US Pokemon phenomenon helped to boost the Gameboy machine and its software, but sales of the Nintendo64 console and software slowed down a bit faster than I expected," Mr Masahiro Ono, an industry analyst at Warburg Dillon Read said.

"The Pokemon boom may boost its software sales beyond the company's projection for the full year, but growth in Gameboy machines will be limited by the tight supply of LCDs (used for Gameboy screen). That limits upward potential for the company," Kokusai Securities analyst Mr Hirotoshi Murakami said. Nintendo director, Mr Hiroshi Imanishi, said the firm was confident of further growth in its Pokemon-related business and had raised its Gameboy software sales target for the full year to 62.8 million units from an earlier goal of 55 million units.

"We shipped 1.8 million units of new Pokemon game on its launch day. We are confident that we will add 3.2 million units by the year end, and another three million by March," Mr Imanishi said.

"Sales of Pokemon games are outstandingly strong since the launch in Europe. We project a total of over two million Pokemon game sales in England, Germany and France by the end of the year."

For the full year, the Kyoto-based company forecast a 26 percent year-on-year fall in its parent-only current profit to 100 billion yen.