It also undermines their handheld business, which is actually more important to the continuing success of the company.
Even with the ridiculous success of the Wii, it was still outsold by the DS family by 50 percent. They sold 100 million Wiis, and 150 million DS systems.
We tend to focus on the console side, partially because the WiiU performance is hilariously bad in that arena, but the secret about Nintendo that nobody talks about is that their handhelds have been enough to keep them afloat basically since the release of the original Game Boy.
It's also why people need to stop making Sega comparisons. Sega dropped out of the hardware market during the Dreamcast era, but they lacked the benefit of a Nintendo sized thriving handheld business; the Dreamcast also followed the amazing successes that were the Sega CD, 32X and Saturn while the WiiU is coming after Nintendo's most successful console machine ever.