That fall is from the high of the Wii's unprecedented success.
http://www.marketwatch.com/investing/stock/ntdoy/financials
Can anyone honestly look at these numbers and tell me Nintendo is doing "just fine?" I can see, "might be OK," or, "will not definitely die," but "just fine," is a total self-deception, especially with the recognition that the bump at the start of this year includes the sales of a new console.
(The Wii did not have staying power -- many people bought it because it was neat but then didn't use it. That's not a recipe for long-term success. The WiiU doesn't even have the mass appeal the Wii had, and its staying power has yet to be proven.)
I could see this if it were some random company faltering after a big hit propelled them into the spotlight, but this is no random company pulled from obscurity. Nintendo has a history of pulling through.
I read the same claims about poor staying power for the Gamecube and N64 too. The only difference with the Wii is a lot more people use the Wii as a paperweight than did for the N64 and Gamecube.
NTDOY, Net income, JPY (Billions), as of March for each year:
2004: 33.2
2005: 87.4
2006: 98.4
2007: 174.2
2008: 257.3
2009: 279.1
2010: 228.6
2011: 77.6
2012: -43.2
2013: 7.1
The end of 2006 was the launch of the Wii, the end of 2012 was the launch of the Wii-U. The DS launched at the end of 2004 (the DS lite mid 2006). Nintendo is in unprecedented financial trouble. It doesn't mean their dying by any means, but considering that an increasing number of next gen. console competitors are headed to market over the next year, it's hardly enough to say "Nintendo has been on the ropes before, they'll pull through!" They've never been on the ropes this badly.
Niche or not, hardcore market or not, the question is can Nintendo sell 30-50 million WiiUs? If they can, they'll have a viable platform that will at least be a good enough vehicle for Mario games. If they can't, they're done on the console side.