Wednesday, April 4, 2007

Nintendo Expected to Announce Upward Revision of Fiscal 2007 Net Income

During the past two years Nintendo has established a pattern of announcing upward revisions of its forecasted fiscal year-end income and dividends during the first week in April. On April 6, 2005 it announced that it had exceeded its forecasted net income by 17.1% for its March 31, 2005 fiscal year. A year later on April 4, 2006 it announced that it had exceeded its forecasted net income for its March 31, 2006 fiscal year by 26.7%.

Within the next few days, shareholders should expect Nintendo to once again announce that it exceeded its forecasted net income for its latest fiscal year ended March 31, 2007. The forthcoming upward revision will be partially due to the fact that Nintendo’s earlier 2007 forecast assumed a weaker dollar and Euro versus the yen.

As of March 31, 2007 the U.S. dollar was trading at 118.05 yen and Euro was trading at 157.33 yen. Nintendo’s financial forecast modifications of January 10, 2007 assumed exchange rates of 115 yen to the U.S. dollar and 143 yen to the Euro. These differing exchange rates benefit Nintendo’s net income because it has deposits and receivables denominated in dollars as well as Euros. For example, as of December 31, 2006 Nintendo had about $3.9 billion in cash, deposits, and receivables denominated in U.S. dollars and $1.5 billion denominated in Euros.

A comparison of amounts denominated in other currencies along with the forecast versus actual exchange rates prevailing on March 31, 2007, Nintendo’s fiscal year-end, suggests that it will announce an increase in net income of about 5% above its January 10, 2007 forecast.

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