Nintendo posted a 23 per cent fall in quarterly profit as software sales for its DS handheld game player slowed and it cut the price of its Wii console, and the company kept its forecast for a first annual profit decline in four years.
Nintendo has seen strong demand for the DS and the Wii lead to record profits in recent years, dethroning Sony, which ruled the global game market for a decade from the mid-1990s.
But momentum for the DS began to slow as it entered the fifth year of its product life a year ago, and Apple's iPhone and other smartphones emerged as alternative portable game machines.
Nintendo, which competes with Sony and Microsoft, maintained its operating profit forecast of 370 billion yen ($4.1 billion) for the year to March.
That would be a third below its 555.26 billion yen profit a year earlier, but more than a consensus for a 361.1 billion yen profit in a poll of 20 analysts by Thomson Reuters I/B/E/S.
Profitability also came under pressure because Nintendo cut the price of the Wii by a fifth in the second half of 2009, responding to similar cuts by Sony and Microsoft, which offer the PlayStation 3 and the Xbox 360, respectively.
Nintendo suffered sluggish Wii sales in April-September, but revived demand with the launch of strong game titles such as "New Super Mario Bros Wii" and the price cut.
October-December operating profit was 192.3 billion yen, down from 249.1 billion yen a year earlier.
Shares in Nintendo closed up 2.5 per cent at 26,320 yen ahead of the announcement, hitting a six-month high and outperforming the Nikkei average, which rose 1.6 per cent. Nintendo shares have lost 17 per cent over the past year, while Sony, which saw its PS3 sales grow sharply after it cut the price, gained 68 per cent.
Reuters