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Tuesday April 18, 4:10 PMSquare Enix cuts profit forecast on lower salesTOKYO, April 18 (Reuters) - Japanese videogame maker Square Enix Co. Ltd. cut its full-year profit forecast by 43 percent on Tuesday, saying sales of hit titles "Kingdom Hearts II" and "Final Fantasy XII" were unable to offset a shortfall in the first half of the year.Square Enix released the games in Japan in the October-March second half for Sony Corp.'s Playstation 2 console but sales were not strong enough to offset earlier weak results. The games division, which contributes nearly 40 percent of total sales, expects a 45 percent decline in profit for the 2005/06 business year, ended March 31, it said. Square Enix now expects an overall net profit of 10 billion yen ($84.88 million) for 2005/06, a 33 percent decline from 14.9 billion yen a year earlier and below the 16.7 billion yen that Reuters Estimates said was expected by the market. The company previously expected a 17.5 billion yen profit. The current business year is also expected to be difficult for the overall industry as highly anticipated next-generation consoles from Sony Corp. and Nintendo Co. Ltd. are not expected to go on sale until the second half. Analysts believe software makers will be hurt this year by the high cost of developing games for the advanced consoles -- Nintendo Revolution, Playstation 3 and Microsoft Corp.'s Xbox 360. While Microsoft's Xbox 360 is already in shops, the initial supply of Sony's Playstation 3 in particular is expected to be small, limiting software sales. Sony's current generation Playstation 2 dominates the global video game market with a share of about 70 percent. Square Enix's earnings should be helped this business year as the two popular titles hit markets in the United States and Europe. "Kingdom Hearts II" was released in the United States on March 28. Its European version and overseas versions of the latest Final Fantasy game are expected later this year. Square Enix said sales for the year just ended are now expected to be 125 billion yen, compared with its previous forecast of 136 billion yen and an actual 73.9 billion yen a year earlier. The company said results from its online games and mobile content units fell short of expectations, although its publishing and video businesses were strong. It said Taito Corp., which it acquired last autumn, is expected to post an operating loss. Square Enix is expected to post its full year results on May 24. Shares of Square Enix closed unchanged at 3,050 yen on the Tokyo Stock Exchange following the news. |
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