Nintendo Co, maker of the Game Boy series of handheld players, may report annual profit rose 69 percent as the yen's fall boosted the value of the No. 2 video-game maker's foreign-currency holdings, analysts said.
Group net income at the Kyoto-based maker of Pokemon video-game software probably rose to ?95 billion (US$774 million), or ?670.6 a share, in the year ended March 31, from ?56.1 billion, or ?395.7 per share, a year earlier, based on the average estimate of three analysts polled.
Nintendo relied on currency gains for profit as sales of the five-year-old Nintendo 64 console declined about 50 percent in the fiscal year. The video-game maker this year faces a challenge from Sony Corp's PlayStation 2 console and Microsoft Corp's Xbox device.
Nintendo will introduce its GameCube video-game console in Japan on Sept. 14 and in North America in November.
"All the good news for Nintendo is from forex this year," said Lisa Spicer, an analyst at ING Barings Securities (Japan) Ltd in Tokyo, who recommends clients buy the stock. "The core business is seeing some declines."
The company's implied second-half profit likely totaled ?69.2 billion, according to calculations based on analyst estimates for the full year. Nintendo will report full-year earnings today.
Nintendo's shares rose as much as 3.8 percent, or ?820, to a 52-week high of ?22,550 yesterday.
The shares were ?370 higher at ?22,100 in recent trading.
A weaker home currency boosts the value of Nintendo's assets in yen terms. It also increases the value of sales when the company converts overseas revenue to yen.
The yen weakened about 14 percent against the US dollar in the six months ending March 31. The Japanese currency fell almost 19 percent for the full year ending March 31.
Nintendo said last month it expects to post group net income of ?95 billion, 22 percent higher than its previous forecast.
The company said sales will be ?462.5 billion, 7.5 percent lower than earlier projected.
Nintendo's first-half profit in the six months ended Sept. 30 rose 51 percent to ?25.8 billion.
Under group accounting rules, a Japanese company is required to book any change in the value of assets denominated in foreign currency as a non-operating profit or loss, which affects pretax profit and subsequently net income.
Nintendo had foreign-currency-denominated assets of US$4.3 billion and DM1.8 billion (US$796 million) as of the end of September, the company said last month. The company declined to disclose more recent figures.
The company's revenue from product sales may rise with the introduction of the GameCube and Game Boy Advance handheld console, analysts said.
Nintendo introduced the Game Boy Advance handheld machine in Japan on March 21. The US release is scheduled for June 11. The GameCube console will be released in Japan in September and in the US in November.
"The question is whether the company survives the doldrums between Nintendo 64 and GameCube with its Game Boy Advance operations," said Shunji Nakauchi, an analyst at Marusan Securities Co in Tokyo.
As of April 30, Nintendo said it had sold 1.6 million Game Boy Advance players and 3.1 million packages of game software.
Nintendo's shares have risen 8 percent since it announced GameCube's release date and software titles at the Electronic Entertainment Expo in Los Angeles last week.
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