Nintendo"s first half sales figure shows a 6.9% sales drop as the GameCube did not perform up to estimates, however weakened Yen and growing DS sales have almost doubled Nintendo"s profits. The drop in sales is from an estimated 175 billion Yen to 190 billion Yen and is due largely to the low sales of GameCube hardware and software.
In spite of this, sales of the company"s handheld device, Nintendo DS have helped boost profits worldwide. In addition, a weaker exchange rate for the Yen has offset the drop in sales, allowing the company to retain its revenue forecasts and increase estimates for the full fiscal year. Nintendo claims that a substantial development investment in its forthcoming next generation console, the Revolution, has also damaged margins. The new machine is expected to launch in Japan in the spring of 2006; competing with Microsoft"s Xbox 360 and Sony"s PS3 consoles.
While the GameCube may be nearing the end of its life cycle, and poor sales of both hardware and software have lowered sales figures for the company, increasing sales of its DS handheld are helping to offset the shortfall. In addition, Nintendo holds around USD 4.7 billion worth of dollar-denominated deposits, which have clearly helped revenue forecasts and overall profits, due to the fluctuations in the exchange rate for the Yen.