Earlier today Nintendo published its financial results for the third quarter in FY 2007. Due to exceptionally high demand for its current products, the Kyoto-based manufacturer raised its net income projections for the current year for the third time.

In the three months ended Dec. 31, net income increased by 142.5% to 126.5 billion yen (1.11 billion USD); sales were up by 267.3 billion yen (2.34 billion USD) to 621.6 billion yen (3.1 billion USD) compared to the previous quarter.

Compared to last year, Nintendo expects its operating income to double to 460 billion yen (4.03 billion USD), while its net income is forecast to reach 275 billion yen (2.41 billion USD), up by 57.8 percent.

Driving Nintendo's strong results are its current console line-up, its handheld Nintendo DS and its home console Wii, both of which have surpassed Nintendo's original forecasts for the fiscal year. Particularly, Wii software sales have exceeded Nintendo's original expectations for the year by 53.4%.

After a slower second quarter - Nintendo DS sales decreased due to lower demand from the US and Japan, while Wii sales stagnated in Japan - Nintendo rebounded in its third quarter, ended December 31st. Even though severely supply constrained due to strong demand in all major regions, Wii sales increased by 78% during the Christmas season.  Moreover, DS sales grew by 74% compared to the previous quarter.

Overall, Nintendo's Wii life-to-date sales have reached 20.13 million units sold and are expected to reach 24.34 million at the end of March, thus passing its predecessor's sales in barely over 5 quarters (Nintendo Gamecube, life-to-date: 21.72 million units). Meanwhile, the handheld Nintendo DS has reached an installed base of 64.79 million units worldwide, with 69.78 million units forecast for March 08. Interestingly, the popularity of the portable game console will propel its installed base beyond PlayStation 2's level in Japan in the fourth quarter.

For the next few months we expect strong Wii hardware sales to continue, as the console is still heavily supply limited, especially in the US, where current demand shows no signs of a slowdown. While Nintendo's handheld, the DS, might slowly reach market saturation in the new calendar year in Japan.  Thus, we expect hardware sales to stagnate or decline in the company's domestic market. A comparison with its predecessor, the GameBoy Advance, shows that there is still a lot of room for potential sales in the US. Consequently, the Nintendo DS should undoubtedly pass the global installed base of the GameBoy Advance in the next calendar year.

Wii	Dec. 06	March 07	June 07	Sept, 07	Dec. 07
Hardware
Americas	1 250 000	2 370 000	3 810 000	5 460 000	8 850 000
Japan	1 140 000	2 000 000	2 950 000	3 670 000	4 990 000
Other	800 000	1 470 000	2 510 000	4 040 000	6 300 000
Total	3 190 000	5 840 000	9 270 000	13 170 000	20 140 000
Software
Americas	9 020 000	14 490 000	23 190 000	33 490 000	60 900 000
Japan	4 330 000	6 120 000	8 900 000	11 900 000	16 830 000
Other	4 160 000	8 230 000	12 730 000	20 430 000	35 460 000
Total	17 510 000	28 840 000	44 820 000	65 820 000	113 190 000
DS
Hardware
Americas	10 180 000	11 740 000	14 140 000	16 060 000	20 180 000
Japan	14 430 000	16 020 000	18 110 000	19 710 000	21 660 000
Other	11 000 000	12 520 000	15 030 000	17 880 000	22 940 000
Total	35 610 000	40 280 000	47 280 000	53 650 000	64 780 000
Software
Americas	49 550 000	58 030 000	69 320 000	82 420 000	109 160 000
Japan	65 200 000	75 110 000	84 900 000	95 130 000	108 450 000
Other	39 490 000	50 850 000	64 030 000	81 930 000	113 250 000
Total	154 240 000	183 990 000	218 250 000	259 480 000	330 860 000