I think that rule isn't very good in this case given the complete lack of software Wii U was getting, and the price cut/new bundles it just received.  I would take post-price cut sales for a few weeks, pretend that was the sales for the full year and then do your math to get an estimate.

The WiiU price cut was only the last week and a half of the 2nd quarter. And I would think selling that many more systems in addition to Monster Hunter, Wind Waker, and Pikmin 3 would make software sales greater. Still confused. 

Eh, could've been worse. With the price cut and the such like this quarter, I expect quite the uptick.

I think the point being that for every Wii U sold Nintendo has been loosing money, which is now loosing more, they had a similar situation with the 3DS, if you sell your product for a loss, more sales = more loss. It is how Sony and MS have lost ungodly billions on their consoles (propped up by other sectors of their businesses). They do that to increase install base and sell more software hoping to ultimately profit.

Yes for the consumer the last week and a half of the 2nd quarter but those units that the consumer bought were shipped weeks before. Now, I don't know if it was the retailers who took the loss or Nintendo honestly (though I would assume nintendo) and as for SW sales I would need to go back and check but Q1 usually has really good SW sales from Easter and "golden week" and gift cards/cash as presents from Christmas. If the cause of the bigger losses isn't either of these then Im not sure what would cause it

Negative shipments in Europe/others? Is it the first time this happens to a console? I'm guessing it means stock has been reallocated.

You can assume that almost all Wii U's shipped in this quarter were done so at the reduced price.  Sales were almost stagnant before the price cut/wwhd launch, so retailers were not ordering more units.  a $50 price cut is significant. It's an additional $15,000,000 in lost revenue despite the increased units shipped.  The more hardware moved actually is actually more likely a negative thing in the short term.  Monster Hunter was a great title, but Nintendo would make more off of a title like Luigi's Mansion because it is first party.  There were no big first party titles released this quarter.  Wind Waker's release was only digital.

Yeah, seeing post price cut sales would make sense. At 60k weekly that would put Wii U at about 4.8mil next quarter with that rule. That's more or less what I expect.

I see. This helps explain it. 

I keep thinking nintendo is going to have a good next quarter every time I read these results, but then every quarter I'm wrong. Now I'm thinking it again. There's no way Nintendo doesn't make a pretty large operating income for quarter 3 right?

Pokemon and 3DS/2DS will make sure of that. However, if you were to isolate their numbers from Wii U's then I don't think it would be all too rosey for the Wii U.