Business / Corporate

Nintendo beats profit estimates thanks to 'Pokemon' and 'Super Smash Bros.' but cuts Switch shipment target

Bloomberg, Kyodo

Nintendo Co. topped quarterly profit estimates on brisk holiday demand for the “Pokemon” and “Super Smash Bros. Ultimate” games, but slower Switch shipments forced the company to cut its outlook for the gaming device.

Operating profit was ¥158.6 billion ($1.5 billion) in the last three months of 2018, the Kyoto-based company said in a statement Thursday. Analysts were projecting ¥147 billion on average, according to estimates compiled by Bloomberg.

Nintendo is now forecasting 17 million Switch shipments for the fiscal year through March, compared with its prior outlook for 20 million units and analysts’ average prediction for 18 million.

But thanks to strong sales of Switch software led by the “Mario” and “Pokemon” games, Nintendo raised the software sales outlook to 110 million units from the previously expected 100 million for the year to March.

Robust holiday sales, the possibility of price cuts and an improving software lineup are helping to boost confidence among investors that President Shuntaro Furukawa will be able to attract more buyers for the hybrid console beyond its core fan base.

“Nintendo needs to expand the audience reach of the Switch,” David Cole, founder and chief executive officer of DFC Intelligence, said in an interview this month. “That is really a marketing” challenge.

Nintendo’s shares, which fell 29 percent in 2018, have climbed 16 percent this year on optimism that the company will be able to stage a recovery. The game-maker kept its operating profit outlook of ¥225 billion for the current fiscal year, compared with analysts’ prediction for ¥267 billion.