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Nintendo profit tops estimates on strong online game sales
NINTENDO Co posted quarterly profit that topped estimates, as higher software sales online made up for weaker shipments of the Switch console.
Operating profit was 30.5 billion yen (S$372 million) in the June quarter, compared with analysts' average projection for 25.6 billion yen. Revenue was 168 billion yen, short of the average projection for 186.9 billion. The company maintained its full-year forecasts for profit, hardware and software sales.
The strong results are the latest twist for Nintendo, which has gone from one of Japan's hottest stocks to a target for short-sellers - wiping out all its gains in the past year. But with Switch software and hardware shipments holding up, it gives new president Shuntaro Furukawa the chance to focus on the launch of its highly anticipated online game service in September.
"The market is pricing an earnings decline from here on, but the only way that happens is if the Switch starts to decline sharply and it never sees growth again," said Atul Goyal, an analyst at Jefferies Group.
Nintendo sold 18 million Switch titles, up from 8.1 million last year, as more people downloaded games from the company's more profitable online store. Switch owners on average each bought 0.9 titles during the quarter, down from 1.7 titles last year. It sold 1.9 million Switch hardware units in the June quarter, slightly less than the two million seen in the same period a year earlier.
Nintendo sold 1.4 million Labo units during the quarter, meaning just 7 per cent of Switch owners bought the new cardboard products.
Revenue from smartphone games was 9.1 billion yen in the quarter, unchanged from a year earlier. The company has yet to provide details or a release date for its mobile racing game Mario Kart Tour, which was announced in February. BLOOMBERG