Nintendo's annual profit dropped for the second straight year as sales of its gaming devices fell despite a price cut for the DS handheld.
The Kyoto-based company behind the Super Mario franchise and the Wii console said Monday its net profit for the fiscal year ended March 31 fell 66 percent to 77.6 billion yen ($947 million) from 228.6 billion yen the year before.
Nintendo, which does not break down quarterly numbers, said annual sales slipped 29 percent to 1.014 trillion yen ($12.4 billion).
The company expects conditions to improve gradually over the next year, with sales of its new 3-D handheld game machine, the 3DS, offsetting an anticipated decline in Japanese consumer spending following last month's earthquake and tsunami.
"Nintendo has not suffered any direct damage which will significantly affect our production. However, it can be predicted that there will be an indirect impact from individual consumption patterns," the company said.
It forecasts sales to rise 8.4 percent to 1.1 trillion yen ($13.4 billion) for the fiscal year through March 2012 and expects earnings to increase 41.7 percent to 110 billion yen ($1.34 billion).
Nintendo is hoping the 3DS device, which lets users play 3-D games without wearing special glasses, will stoke similar enthusiasm as its Wii console did five years ago with its innovative motion based controller.
The new handheld machine, which also takes 3-D pictures and will eventually offer 3-D movie streaming, went on sale February in Japan for 25,000 yen ($302) and March in the United States for $250.
But the device may have some trouble establishing itself in a market saturated with smart phones loaded with cheap, easy-to-play games such as "Angry Birds."
Sony Corp., meanwhile, has announced a successor to its PlayStation Portable that is due to go on sale late this year boasting flashier graphics on a large screen.
Nintendo said in its earnings statement that the 3DS has been selling briskly since its launch and that it expects to move 16 million of the machines in the current fiscal year, but that the company's overall hardware and software sales have been down.
Nintendo sold 15 million Wii consoles last fiscal year, down 27 percent, and expects to sell just 13 million in the current fiscal year.
Sales of its standard DS device, meanwhile, dropped 35 percent to 18 million units over last fiscal year and were expected to drop to 11 million units this fiscal year.
The company's bottom line also took a hit from its decision to cut prices on the DS during the last fiscal year, which helped drag its hardware sales revenue down 29 percent over the previous period to 610 billion yen.
The yen's appreciation between the two fiscal years also hurt the company's earnings from exports. On March 31, 81 yen was worth a $1; a year earlier, 94 yen bought a buck.