While Nintendo may be in third place when it comes to the current-gen console race, people often forget that what really matters is how profitable the business is. In this regard, Nintendo continues to lead the video game space.

Today Nintendo announced in a preliminary earnings statement that, thanks in part to currency-related gains, its net profit for the year ended March 31, 2006 increased by nearly 9 percent to 95 billion yen ($808 million). This full-year net income is the highest Nintendo has achieved since its 106 billion yen profit in fiscal 2001.

Although profit was up, full-year revenue was down 3 percent to about 500 billion yen, which is in line with the Nintendo's earlier estimate. Operating profit—sales minus the cost of goods sold and administrative expenses—also decreased 19 percent to about 90 billion yen.

In an earlier forecast, Nintendo said it was expecting net income to fall by 14 percent to 75 billion yen; however, the company recorded a 45 billion yen gain because the yen fell against the dollar, spokesman Yasuhiro Minagawa told Bloomberg news.

Nintendo's earnings were also boosted by the incredible success (particularly in Japan) of the Nintendo DS handheld, which the company has had a difficult time manufacturing enough of to meet the demand. "We are making our utmost efforts for the console to be on store shelves within April," Nintendo President Satoru Iwata said at a press conference.

As of February Nintendo has sold more than 6 million DS units in Japan since the launch in December 2004, and sales of the handheld will likely be further driven by the new, sleeker DS Lite model and upcoming features/products such as a Web browser and TV tuner. Nintendo is targeting 10 million units in Japan alone by the end of this year.

Nintendo also announced today that shareholders would be nicely rewarded by the company's recent success, as it intends to pay a significantly higher dividend for the full year—370 yen compared to its earlier plan to pay at least 140 yen. In fiscal 2004 Nintendo paid out 270 yen.

The good news gave Nintendo shares a slight boost as well. In trading on Tuesday on the Osaka Securities Exchange, shares of Nintendo rose 330 points (1.9 percent) to 17,776 yen ($151). Nintendo is expected to report final earnings on May 25.