Nintendo Co Ltd posted a 41 percent fall in nine-month profit as sales of its DS handheld game player slowed and it cut the price of its Wii console, and the company kept a forecast for a first annual profit slide in four years.

April-December operating profit at Nintendo, which competes with Sony Corp and Microsoft Corp, was 296.7 billion yen ($3.3 billion), down from 501.3 billion yen.

Demand for the once-mighty DS began to slow as it entered its fifth year of production a year ago, and Apple Inc's iPhone and other smartphones emerged as alternative portable game machines.

Profitability also came under pressure because Nintendo cut the price of the Wii by a fifth in the second half of 2009, responding to similar cuts by Sony and Microsoft, which offer the PlayStation 3 and the Xbox 360, respectively.

For the year to March, Nintendo kept unchanged its operating profit forecast of 370 billion yen, down from 555.3 billion yen a year earlier and versus a consensus of 361.1 billion yen in a poll of 20 analysts by Thomson Reuters I/B/E/S.

Shares in Nintendo closed up 2.5 percent at 26,320 yen ahead of the announcement, hitting a six-month high and outperforming the Nikkei average, which rose 1.6 percent.

Over the past year, Nintendo shares have lost 17 percent, while Sony gained 68 percent.

(Reporting by Kiyoshi Takenaka, Editing by Dean Yates)

Iphone Electronics Sony Nintendo