UPDATE 3-Nintendo Q4 jumps 60 pct on Wii boom, outlook modest

(Writes through with analyst, company comments)

By Kentaro Hamada and Edwina Gibbs

OSAKA, April 24 (Reuters) - Japan's Nintendo Co Ltd (7974.OS), maker of the hit Wii game console, said on Thursday fourth-quarter profit jumped 60 percent, but it forecast modest annual growth of 9 percent as it expects sales of its DS handheld machine to slow.

The conservative projection comes despite seemingly insatiable demand for the Wii, which has so far outsold Sony's (6758.T) PlayStation 3 and Microsoft Corp's MFST.O Xbox 360 since its launch in late 2006.

Starting with the DS, and then the Wii, which has attracted new casual gamers with quirky but easy-to-learn games and its motion-sensing controllers, Kyoto-based Nintendo has more than doubled its operating profit for two years running.

Expecting too much spectacular growth is unrealistic, said KBC Securities analyst Hiroshi Kamide.

"They are on top of their game. I don't think they can do much more than they are at the moment," he said.

Operating profit for the January-March quarter surged to 93.2 billion yen ($900 million), handily beating a Reuters Estimates consensus of 82 billion yen from 19 analysts.

But Nintendo, valued at around $81 billion, expects profit to climb to 530 billion yen this business year, 6 percent below the average analyst estimate of 566.5 billion yen.

Nintendo's wildly popular Super Smash Bros. Brawl fighting game and the imminent launch outside Japan of the Wii Fit home fitness programme are expected to drive sales and help Nintendo contend with unfavourable currency rates.

But PlayStation 3 and Xbox 360 are also expected gain some momentum on the back of new software titles for the core gaming community like "Grand Theft Auto 4" from Take-Two Interactive Software Inc (TTWO.O) and "Metal Gear Solid 4" from Konami Corp (9766.T).

PlayStation 3 will also be helped by its Blu-Ray capability for next generation high definition movie discs although analysts differ on how far better sales of rival machines would seriously hurt the Wii, which targets a different market.

Nintendo said revenue should increase 8 percent to 1.8 trillion yen and forecast global Wii sales would increase 34 percent to 25 million units this business year, while targeting a 48 percent jump in software sales to 177 million units.

It also said it may ramp up Wii monthly production capacity by a third to 2.4 million units.

But it said annual sales of its DS handheld player would likely fall to around 28 million units from 30.3 million.

"We can't expect the same kind of (DS) growth for Japan that we've seen in the past two years, but in the United States and Europe, there's still considerable room before we peak," Nintendo President Satoru Iwata told a news conference.

Nintendo forecast net profit to grow 26 percent to 325 billion yen on a sharp fall in currency appraisal losses. It also raised its annual dividend outlook to 1,370 yen, up from 1,260 yen, which was in turn a huge jump from 690 yen the previous year.

Microsoft reports its third-quarter earnings later on Thursday, while Sony's annual results are due on May 14.

Nintendo shares have fallen 12 percent so far this year in line with a drop in the Nikkei average .N225, but have gained more than 60 percent in the past 12 months.

The stock closed down 1.4 percent at 57,900 yen on Thursday ahead of the results. The Nikkei fell 0.3 percent. (Additional reporting by Nathan Layne, Taiga Uranaka, Yumi Horie and Aiko Hayashi; Editing by Hugh Lawson)