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Nintendo profit drops after six years of growth

Price cuts on the Wii and sluggish global sales trigger an 18 percent drop in annual profit for Nintendo, the company's first earnings decline in six years.

Nintendo's annual earnings have dropped for the first time in six years.

On Thursday, the Wii maker reported a profit of 228.6 billion yen ($2.5 billion) for its fiscal year that ended March 31. That's an 18 percent decline from last year. Sales also slipped 22 percent year over year to 1.4 trillion yen ($15.4 billion).

Nintendo's Wii Nintendo

Nintendo blamed the weaker financial performance on several factors, including a recent price drop on the Wii, fewer strong Wii titles, appreciation of the yen, and poor global sales.

Demand for the Wii was down in the first part of the fiscal year due to slower consumer spending during the recession. But the company said sales of the game console did rebound over the holiday-shopping season. For the full fiscal year, Nintendo sold 20.5 million Wii consoles compared with 26 million the previous year.

Faced with ongoing competition from rival console makers Microsoft and Sony, the company dropped the price of the Wii last September by $50 to $199.

Demand for the DS portable game console was also down for the year as Nintendo sold 27.1 million DS units around the world compared with 31.1 million the year before. But sales were strong in the Americas with gamers scooping up 12.3 million DS consoles, breaking the game-machine sales record in the region, according to the company.

Portable sales included the larger-screen DSi XL console, which Nintendo debuted in Japan last year and then worldwide in March. The company said it has sold 128.9 million DS consoles to date, making it the best-selling handheld game machine since its Game Boy series hit the market in 1989.

On the software side, Nintendo sold 16.1 million copies of Wii Sports Resort and 12.6 million copies of Wii Fit Plus for the year. New Super Mario Bros., released late last year for the Wii, sold 14.7 million copies worldwide. The company recently announced that it would bundle Sports Resort and its MotionPlus controller with each new Wii console starting Sunday.

Despite the upcoming Nintendo 3DS handheld and promising game titles, such as Pokemon Black, Pokemon White, Metroid: Other M, and Super Mario Galaxy 2, Nintendo is eyeing rough times in the current fiscal year as well.

For its current fiscal year ending March 2011, the company expects that earnings will fall 12.5 percent to 200 billion yen ($2.2 billion) and that sales will decline 2.4 percent to 1.4 trillion yen ($15 billion). Nintendo also expects Wii sales to drop further, hitting 18 million in the current fiscal year.

The company may also be facing heavier competition from Microsoft and Sony, which are both ramping up to launch their own motion-sensing game devices this year.