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July 31, 2009

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Nintendo's net drops 61% on fewer Wii sales

NINTENDO'S quarterly profit fell 61 percent as sales of the once unstoppable Wii console tumbled for the first time since its launch three years ago.

The Kyoto-based firm said yesterday its April-June net profit fell to 42.3 billion yen (US$445.2 million) from 107.3 billion yen a year ago.

Sales declined 40 percent to 253.5 billion yen, while operating profit - a measure of its core business - fell 66 percent to 40.4 billion yen.

The company blamed its results on a dearth of hit software titles, without which demand for the Wii and handheld DS device floundered. Last year, new game titles like "Mario Kart Wii" and "Wii Fit" helped drive strong hardware sales, it said.

Nintendo sold 2.23 million Wii units during the three months, compared with 5.17 million last year. Global sales of Wii software totaled 31.07 million units from 40.41 million the previous year.

Customers bought 5.97 million DS devices, down 14 percent on year.

"I knew the results were going to be bad, but this was even worse than my expectations," said Satoru Kikuchi, an analyst at Deutsche Securities in Japan.

Nintendo's sales to the Americas fell 38 percent, while those to Europe plunged by more than half - troubling signs for a company that derives 87 percent of its revenue from overseas markets.

The company was also hurt by a stronger-than-expected yen, which reduces the value of overseas profits when repatriated to Japan.

It has estimated an exchange rate of 100 yen to the dollar. Instead, the dollar averaged 97.32 yen in the quarter.

In June, United States sales of game hardware, software and accessories plunged 31 percent from the same month last year to US$1.17 billion, according to market researcher NPD Group.



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