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Thursday, 24 May, 2001, 11:08 GMT 12:08 UK
Nintendo profits fall 42%
detail from Nintendo website
Nintendo has built its name on characters such as the Mario brothers
The world's second biggest home videogame-maker, Nintendo, has announced a 42% fall in operating profits for the year to the end of March 2001.

The drop to around 85bn yen ($705m) of profit, from 108bn yen the previous year, reflected sluggish sales of Nintendo 64 game consoles and a weaker-than-expected performance by the handheld Game Boy.

Sales were also down nearly 13% to 462.5bn yen.

Nintendo GameCube
Nintendo is pinning its hopes on sales of the new GameCube console

But analysts are predicting a turnaround later in the year, based on sales of the Game Boy Advance machine and the new GameCube console which will go on sale in the US in November.

"Nintendo's GameCube has now cleared two hurdles for success... with a competitive price and exciting software line-ups," said Lisa Spicer, senior analyst at ING Barings.

"Although GameCube's hardware business will make a loss this year, its high margin software operations are expected to become a solid profit earner after 2002/03," she said.

And Nintendo itself is looking forward to a revival in its fortunes, projecting a 25% rebound in sales to 580bn yen in the next financial year.

GameCube

The pricing of the new GameCube console - at $199.95 in the US - is about $100 cheaper than the machines made by Nintendo's rivals.


Microsoft does not understand the entertainment business

Ken Kutaragi
Sony
Microsoft's X-Box, due to be launched in the US in the same week as the GameCube, is to be priced at $299 - the same price as Sony Playstation 2.

The $20bn games industry is becoming increasingly competitive, prompting battles between some of the main players.

In an interview with the Financial Times newspaper on Thursday, Sony Computer Entertainment's president Ken Kutaragi laid into new kid on the gaming block - Microsoft.

Mr Kutaragi alleged that Microsoft's X-Box was "finished before it even got started".

"They have no games," he said, adding that the Seattle-based company "does not understand the entertainment business".

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See also:

18 May 01 | New Media
Nintendo steals march on X-Box
22 May 01 | Business
Nintendo GameCube to undercut rivals
24 Nov 00 | Business
Playstation 2 sweeps into Europe
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