TOKYO (Reuters) - Nintendo Co boosted its annual profit outlook by 23 percent on white-hot demand for its Wii video game console and DS portable player, beating market expectations and sending its shares more than 8 percent higher.
As consumers in the United States and Europe snap up its game machines, Nintendo hiked forecasts for the Wii 6 percent and for the DS 9 percent, pushing the company to the limits of current production capacity.
“The fact that Nintendo is confident to say even before the end of the first half, that overseas sales are this strong, will likely help the stock ride a wave towards the Christmas shopping season,” said Koki Shiraishi, an analyst at the Daiwa Institute of Research.
The Wii, launched in late 2006, has far outsold Sony’s PlayStation 3 and Microsoft’s Xbox 360 in the $57 billion video game industry, thanks to its easy-to-learn motion-sensing controller, low price and innovative titles like the “Wii Fit” exercise game.
Nintendo said it now expects an operating profit of 650 billion yen ($6 billion) in the year to March, up from its previous forecast of 530 billion yen, also helped by a softer yen.
It sees sales of 2 trillion yen, 11 percent higher than its previous estimate.
The new profit forecast trounced a Reuters Estimates consensus of 605 billion yen from 20 analysts.
Nintendo’s shares rose by their daily limit of 4,000 yen to close at 51,800 yen, outperforming a 2.4 percent climb for the Nikkei benchmark
The stock’s value grew more than five-fold in the two years through October 2007, spurred by strong sales of the DS and Wii, Nintendo’s twin growth engines.
But it has lost 28 percent since then due to investor concerns that its break-neck growth may be slowing.
The company lifted its annual dividend forecast to 1,680 yen, up from the 1,370 yen it had expected in April. It also lifted its half-year operating profit estimate by 17 percent to 245 billion yen.
Nintendo’s robust sales underscores the video game sector’s resilience in the face of soaring oil prices and sluggish consumer spending which have hurt industries such as autos.
“Games aren’t all that expensive, so they’re appealing even now. Something like a car, of course, is quite different,” Shinkin Asset Management fund manager Tomomi Yamashita said.
By contrast, Toyota Motor Corp cut its 2009 vehicle sales forecast on Thursday.
Nintendo said it now aims to sell 26.5 million Wii consoles and 30.5 million DS players this business year.
Additional reporting by Elaine Lies and Kiyoshi Takenaka; Editing by Edwina Gibbs