January 26^th, 2005 (1:56pm) - Reuters is reporting that Nintendo Co. Ltd.’s third-quarter net profit fell 43 percent, resulting in the company cutting its forecast by more than a fifth.

The losses are the result of weak demand for the GameCube console and lower revenues for Game Boy Advance SP as a result of a worldwide price cut in September. Although, hardware sales for the Nintendo DS handheld have been extremely promising for the company. To the date 2.84 million NDS units have been sold, beating Nintendo’s original target.

Nintendo has increased its Nintendo DS shipping forecasts by 20 percent, but the company has slashed its DS software forecast by a third to 10 million. Nintendo blames the disappointing Nintendo DS software sales on the handheld’s included PictoChat text messaging "game," the bundled Metroid Prime Hunters: First Hunt demo, and the DS’ ability to play newly released Game Boy Advance titles such as the Legend of Zelda: The Minish Cap, instead of blaming the lack of new game releases and compelling software.

"DS software is not selling because users are playing the pre-installed PictoChat game. Even if they buy a game, multiple players can use it to play against each other, eliminating the need for each to buy their own game," said Nintendo Senior Managing Director Yoshihiro Mori. "We also included a demo game with the DS machine in the United States, and pushed back some game releases into the next business year."

Nintendo’s grip on the handheld market is expected to loosen when Sony’s PlayStation Portable (PSP) sees a release in North American and Europe this march. While the Nintendo DS has seen better sales than the PSP in total in Japan, last week the PSP had managed to move more units of the PSP over the Nintendo DS, a clear sign that the Japanese videogame buyer is very interested in the PSP and its capabilities.