Nintendo never sold hardware at a loss and they will never do so (thats what they said). The N64 CPU for example didnt even cost em $10 at launch date.
CPUs are actually quite cheap to manufacture (especially in bulk). The majority of the costs go towards the design and the upkeep of the fabrication labs, and the design and manufacture of the motherboard/etc. Of course, when you start trying to produce huge chips like the cell then the yeilds go down and the costs start to skyrocket…
But yes, Nintendo have always tried to make a profit on the actual hardware. I wouldn’t be surprised if the Wii is pitched to make Nintendo a slight profit on each one sold (or maybe even break-even).
For anyone interested in the Cell, I’d highly recommend checking out all the released docs from IBM. A surprising amount of low-level implementation detail is contained within. You can form your own opinions as to whether Java on the PS3 is going to be a good idea.