Nintendo Co Ltd said on Thursday it expected profits to weaken this year, as its GameCube game console goes toe-to-toe in a price war with Sony's PlayStation 2 and Microsoft's Xbox.

Nintendosaid it scored a group net profit for the year ended March 31 of $855.8 million, up 10.2 percent. Group sales came in at 554.89 billion yen, up 20 percent.

But the company said it expected net profit to dip to 90 billion yen in the year to next March, down about 15 percent, despite a 15 percent rise in sales to 640 billion yen.

Analysts have said that Nintendo could see sales of its GameCube console suffer this year as Sony Corp and newcomer Microsoft Corp raise the heat on prices.

Osaka-based Nintendo said 70 percent of its sales in the latest year were overseas, giving the bottom line an added boost as foreign currencies were converted into weaker yen.

But some analysts noted the yen has strengthened recently and that this advantage could disappear in the current year.

The results, announced after the market closed, were close to what Nintendo projected last month when it revised up its 2001/02 forecast to a net profit of 110 billion yen from 80 billion.

"The company has cut the price of GameCube but it's still unclear what the impact will be," said Takeshi Tajima, an analyst at BNP Paribas in Tokyo.

But analysts say Nintendo's software line-up looks promising, and the company should benefit from strong industry-wide console sales. GameCube was launched in Japan last September, and the box-like game player made its North American debut in November.

Sony cut the U.S. price of its PlayStation 2 consoles to $199 from $299 on May 13, and this was followed by a similar cut by Microsoft on its Xbox two days later.

Nintendo then cut the U.S. price of GameCube to $149 from $199 on May 19 and said the price in Japan would fall to 19,800 yen from 25,000 yen to regain the advantage.

With the price cuts, Nintendo aims to ship 12 million GameCubes and 36 million software packages this year.

Zachary Liggett, an industry analyst at WestLB, said the average of three software sales per unit seemed low.

"When you consider the blockbuster titles they have in the pipeline, basically from the summer through the rest of the year, I think that number is most likely going to come up conservative," he said.

Nintendo said it expected to ship 19 million Game Boy Advance units this year after selling 21.78 million in 2001/02. The company also plans to sell 57 million Game Boy software titles.

Liggett said one concerning factor was the exchange rate forecast by Nintendo for the current business year.

Nintendo is working on a dollar/yen rate of 130 yen.

"If you look where the exchange rate is now and project that forward, that would be a potentially negative, not huge at this point," Liggett said.

The yen was trading around 124 to the dollar on Thursday

Concerns that the price cuts will dent Nintendo's earnings have sent its share price lower recently.

The stock is down more than eight percent this year, compared with an 11 percent rise in the Nikkei average.

Nintendo also said it would seek shareholder approval to spend up to $2 billion to buy back up to 14 million of its own shares, 9.88 percent of those outstanding.