There's nothing they can do to combat this problem head on. 

What I think may happen though is they will make their own gaming tablet and try to have that coexist with a cheaper 3DS. 

If they can squeeze 10 million units from both product lines annually, that's 20 million portables sold a year ... which suddenly doesn't seem so bad. 

ds twice did almost 30 million in a year with several other years over 20million

wii also had a few years more than 18million

This!

Hmmm, maybe I don't fully understand the financial jargon from the links, but if they posted a loss rather than a profit, couldn't a large portion of these losses actually be DEVELOPMENT costs?! We all know the 2014 schedule for Wii U is packed with both announced AND unannounced (or at least only acknowledged to exist, nothing has been shown) games being developed straight from Nintendo's pockets. If we know WHAT is causing the loss, it may not be as bad as it seems...

Think about it, what if they're posting a loss because 2014 is about to blow our minds with how much money they've been pouring into development of games during this 2013 fiscal year?!

Exactly.  Mobile devices have caused the market for dedicated handhelds to shrink substantially.  The market hasn't disappeared entirely, of course; there's still plenty left to support the 3DS.  But Nintendo can no longer rake in the kind of crazy cash that they have been able to in previous handheld generations.  They can still make money from it, but to keep the company profitable their home console must be able to pull it's own weight.

Truth!!!

Well, no.  They knew what they were planning for development back when they made their initial predictions, so if these losses are all about development costs, they would have projected low figures and said "profits will be low this year because we're developing tons of shit".  So, since they're cutting forecasts at the end of the year, it pretty much has to be (and they said it is) because sales fell below expectations.

I just think with money being tighter than it ever has been before (since video games were made) and those damn smartphones, games are going to see a decline compared to years past (meaning consoles and ps vita/3ds) because there are more variety of games now than ever before and in this poor economic state a lot of people just prefer to spend 5$ on a game for their phone which they already own (and carry around with them) instead of spending 300$ on a system and then spend another 60$ for each game. Phones are getting to the point where they will be surpassing the power of the consoles like X-box 1 and PS4. :(

Well, as I said before (in another thread - why you should buy a ninty console) - it is a stupid idea to buy this console. I don't know, if they make some research, but to make console only slightly better then the ending 7th era consoles without any progression, was the stupidest thing they ever do. I know, many of you wouldn't agree with me, but as i said,it price should be something like 150 eur with 2 pads and 3 games. That would be a perfect match for a price. So, i see this cutting as a normal and everyone should see it comming. I think that they already loose this generation and they should already started to thing about new console, or leave the console war and stay only on handhelds. They will be fine, like in a time of N64. So i see it already as PS4 the king of this generation, then loooong nothing, XBOne, Long long long long long nothing and WiiU (wii who ?)...

Looks like Sonys Vita sales excuse wasn't so off the mark as Nintendo fans were saying after all.

Mobile/Tablet market is slaughtering dedicated handhelds, and Nintendo not only dropped the ball, but acted like a special needs child and kicked it away when bending down to pick it back up.
Then said ball rolled over some poop, and into a road where it was run over by a truck.