While Nikon makes great DSLR (but not necessarily better than the competition), their point and shoot cameras aren't any good. Not when compared to the Canon S95 in the cheap segment. Or the Fuji X10 in the expensive segment. Nikon can't even get the mirror-less interchangeable lens system right : what were they thinking with the Nikon 1 ? the sensor is way too small, much smaller than the already small sensors of the Four Third system from Olympus/Panasonic and the size of the sensor is one of the most important thing to consider when it comes to image quality. Canon obviously knows better than Nikon and their entry to that market will feature an APS-C sensor.
Whatever it is that Nikon does, they do not understand photography anymore, apart from the few who work in their DSLR division.