How odd indeed. From boasting quadruple sales of hardware in the U.S.A, to now being in the red zone. Talk about a roller coaster!
Unless I'm dead wrong, Japan's economy has been down since the early 90s (Any economists or business majors care to clarify why?). So as mentioned earlier, Nintendo has done alright despite this.
If there's one thing that makes Nintendo unique, is that they do things their way, from the hardware ( Propriety discs on the 'Cube and the upcoming wireless adapter for SP is propriety as well.), to the software, to their business practices. Its not they won't swallow up companies, its just they wouldn't leave them intact; they would be molded in Nintendo's image. That takes yen and effort. (The opening of their Tokyo branch is an example, they didn't just open up shop, they were extensively trained in the art of Nintendo.) And I'm sure Silicon Knights and Retro Studios were given not a crash course of Nintendo 101, but a full, extensive lesson on Nintendo's MO.
When you do swallow up companies you also get their baggage, such as previous debts. The swallow'er' hopefully has the resources to fix up the swallow'ee'. (W/o getting too off topic, When Air Canada bought out Canadian Airlines, they got their problamatic management and debts. Air Canada in turn has been unable to fix all their problems, leaving them in a jam.)
While that may be a farfetched example, its a guideline of how just buying up companies won't fix the problem. Since 'Cube sales have been on the rise in such a short time, by the end of the fiscal year should show some great profits. I don't see Nintendo rolling over and dying anytime soon.