Nintendo said on Thursday its net profit fell by half in the past business year, hurt by disappointing sales of its GameCube console and currency losses, but predicted earnings would bounce back this year.
Nintendo, the creator of "Mario Bros." video games, also unveiled a bullish shipment target for its new dual-screened handheld game machine and hinted that development for a next-generation home console is further along than expected.
"Nintendo is becoming more aggressive and more commercial, which it needs to be if it intends to compete," said Hiroshi Kamide, analyst at KBC Securities, who has a "buy" rating on Nintendo shares.
"We're also very happy with the forecasts."
The Kyoto-based video game maker forecast a net profit of 70 billion yen ($625 million) in the business year ending March 31. That beat analysts' consensus estimates for 68 billion yen.
For the past business year, the video game maker said group net profit totalled 33.2 billion yen versus a profit of 67.3 billion yen in 2002/03.
The result came as little surprise after Nintendo cut its net profit estimate in April.
Nintendo expects revenues to rise three percent to 530 billion yen this year from last year's sales of 514.8 billion yen. That marked a 2.1 percent rise from 2002/03 revenues.
The maker of the handheld Game Boy Advance machine said it targets shipments of 3.5 million "DS" machines, which will come with two, three-inch (7.6 cm) LCD screens, one of which is touch-sensitive and works with a pen-like device.
"In order to have the DS out by Christmas, we plan to start production late summer or early fall and boost production every month," Nintendo Senior Managing Director Yoshihiro Mori told a news conference.
The shipment forecast for the DS, due out later this year in Japan and the United States, is more optimistic than Sony Corp's target to ship three million units of its PlayStation Portable (PSP), a new handheld due out later this year in Japan.
The PSP will not roll out in Europe and the US until the January to March quarter.
Nintendo said it may be able to debut its next-generation game console, a successor to the GameCube machine, at next year's E3 video game industry trade show, which is usually held in May.
Company president Satoru Iwata promised at this year's E3, held earlier this month, that Nintendo's next-generation console would create a "gaming revolution" since it would redefine how people play video games.
Industry watchers had expected Nintendo's next-generation console to trail behind the launch of Microsoft Corp and Sony's latest consoles. Nintendo's two rivals are not expected to show a new machine until next year's E3.
Nintendo aims to do better with the next console than it has with the Gamecube, which failed to reach its shipment target of six million in 2003/04.
It shipped only five million because of competition from Sony's PlayStation 2 and Microsoft's Xbox, until a price cut in September spurred demand in the United States. It forecasts shipments of 4.5 million GameCubes this year.
Nintendo also suffered a one-time currency loss of 68 billion yen after reassessing the value of its dollar-denominated assets.
The company adjusts the value of its $5 billion of dollar-denominated assets every year to account for prevailing exchange rates.
The yen is currently trading at near 111.40 to the dollar and 135.40 against the euro.
It based this year's earnings estimates on a dollar-yen rate of 105 and a euro-yen rate of 127.
Nintendo, one of the most cash rich companies in Japan, also said it plans an annual dividend of between 140 to 270 yen per share this year after last year's 140 yen.
In terms of operating income, Nintendo forecast a profit of 110 billion yen versus last year's 107.7 billion yen. It reported an operating profit of 100.1 billion yen in 2002/03.
Prior to the earnings announcement, Nintendo shares rose 0.47 percent to 10,700 yen, compared to a 0.12 percent rise by the Nikkei 225.
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