By Edwina Gibbs

TOKYO (Reuters) - Japan's Nintendo Co Ltd nearly tripled its first-half profit and boosted its annual earnings outlook on Thursday as its popular Wii and DS game machines outsell rival Sony Corp's PlayStation.


Offering quirky, easy-to-learn games and breaking new ground with motion-sensing controllers, Nintendo has expanded the gaming population to women and older people, a strategy that has helped its shares jump five-fold in two years.

Kyoto-based Nintendo raised its operating profit forecast for the year to March to 420 billion yen, in line with analysts' expectations, and up from an earlier estimate of 370 billion yen.

The revised forecast is 86 percent above the previous year's result and follows an increase in first-half profit to 188.8 billion yen.

Annual revenue is now expected to rise 60 percent to 1.55 trillion yen.

Demand for the Wii has been strong in the last couple of months, easily outpacing Sony's PlayStation 3, although Microsoft Corp's rival Xbox 360 has gained ground on its alien shooting game "Halo 3."

Sony, which has been selling PlayStation 3 below what it cost to produce, posted an operating loss in its game division during July-September but said it aims to break even or make a profit in the second half of the business year.

However, it swung to an overall operating profit in the quarter on robust sales of digital cameras and camcorders.

Nintendo lifted its annual global sales target for the Wii by 1 million units to 17.5 million and hiked its software sales goal by 35 percent to 97 million units.

And in a major coup, Capcom Co Ltd said earlier this month it would develop the latest version of its blockbuster "Monster Hunter" action game for the Wii.

The game had previously been developed for Sony's consoles and the switch to Nintendo has fed speculation that support for the PlayStation franchise may be slipping.

Building on its Wii sports-oriented games, Nintendo is to launch a "Wii Fit" home fitness game featuring a pressure-sensitive mat that allows players to head soccer balls and imitate ski jumping.

Nintendo has become one of Japan's top five most valuable companies by market value although its stock ended 3.5 percent at 66,400 yen after a 7.8 percent climb a day earlier.

It revised its annual net profit forecast to 275 billion yen, up 12.2 percent on its previous estimate and 58 percent higher than the previous year. It also hiked its dividend forecast for the year to 1,090 yen from 960 yen.
© Copyright 2007 Reuters.

Photo:
I4U Nintendo Wii gadget model. See more photos.