Nintendo profit hit by smart phone gaming

Japanese Games giant Nintendo saw its third-quarter profits slashed in half, hit by a strong yen and disappointing sales of hand-held gaming machines.

The world's biggest maker of video game players is struggling to fend off competition from traditional rivals Microsoft and Sony, but is also striving to cope with a growing threat from Apple and other makers of game-playing smartphones.

After a three-year run of record profits to March 2009, Nintendo's margins have deteriorated sharply, triggering a slide in its shares. Investors doubt its ability to find new growth drivers as demand for the DS hand-held and Wii console wanes.

Nintendo said its July-September operating profit was 30.89 billion (239 million), compared with a 63.96bn profit a year ago. The profit fall was not a surprise after Nintendo revised down its forecasts last month to account for the impact of a firmer yen and a delay in the launch of a 3D DS player to next year.

The firm kept its operating profit forecast for the year to next March at 210bn.

The profit will be its lowest in five years, a return to levels before it launched the Wii and de-throned Sony from the industry's top spot.