How can it be beaten by the Dreamcast if it's still selling and some of its biggest games are yet to come out?

Does the per unit cost cover the development cost? Also what are the long term costs of losing market share?

Is there really any point? By flogging a dead horse they risk losing more and more market share to either Sony or MS. Getting users then to hop over to a different platform would be very difficult considering trophy collections, friend lists etc unless you offer a very compelling console e.g. cheaper more powerful PS4 vs Xbox One.

True, but what future does the handheld space have? The 3DS has sold considerably less than the DS, and with mobile gaming developing at a fast pace, will it result in the same situation that the Wii U currently has - only the diehard core fans will purchas the console?

Rising financials hardly means bowing out of the console race isn't up for consideration - that's a very narrow view of the situation. They've lost a huge percentage of the market to Sony and Microsoft and it's debateable (see above reply) as to whether they can realistically get these gamers back. Nintendo's image is also struggling with a childish image - do you think this could be shaken? Personally I think they'd have to make a spin-off company to distance themselves away from the vivid and percieved as childish games that they are known for. 

If you don't think there's something here worth talking about a) don't reply and b) look at the facts and figures. The Wii U will have been made on the assuption it would return a certain amount of profit, not just profit. That simply demonstrates a woeful lack of understanding business models. 

Dreamcast sold quicker and yet was still seen as a failure. Begs the question why Nintendo are still flogging a dead horse. 

Well PS4 sold quicker than X1 and now X1 will win this generation for being more awesome and cheaper. So that doesn't say anything.

Sony eliminated themselves from the handheld space.

@OP

Nintendo's current position in the market is in no way comperable to SEGA circa 2000-01. Nintendo has a highly profitable handheld to fall back on as well as several popular game franchises. That being said Nintendo has to make some radical changes to their approach to console gaming in order to remain relevant to the market. They can not bank on getting lucky again and they certainly can not count on the competition getting complacent and reckless *cough* PS3 debacle *cough*. What they do need is a major overhaul of their online services as well as the hardware (better specs and standard PC architecture), development tools and whatever else it will take to finally win over at least a portion of third party developers. Beyond all of that it certainly wouldn't hurt if they managed their secondary franchises more carefully.

Sega downfall still stands as the darkest moment of my gaming career.

... Dreamcast was doing fine, sega was bleeding money tho

Because if they cut and run now, they can't recoup any of the losses they incurred in the last few years of 3DS/Wii U. If they keep Wii U on the market and act to maximise profitability rather than marketshare, they can rescue some kind of financial positive from what is otherwise a poor generation for them. Launching a new console will be expensive, as would going third party. Better to make what money they can before they have to sink even more money into a change of direction. 

What's better for Nintendo launching their next home console? 15 million Wii U owners who received a lot of quality Nintendo software, and who were happy that Nintendo continued supporting the system? Or 7 to 11 million (assuming they cut and run sometime in the next 12 months) unhappy consumers who spent several hundred pounds/dollars on a system Nintendo weren't willing to stick with?

What looks better to a consumer buying the next home console from Nintendo? Nintendo, the platform holder who couldn't make Wii U succeed so they dropped support within three years of launch (and who cut the 3DS price massively after launch)?Or, Nintendo the platform holder that continued to bring their biggest, best titles to Wii U despite a small userbase?

What's a better bet for publishers and consumers? A platform holder who stands by their hardware, or a platform holder who runs at the first signs of trouble? If publishers and consumers are going to invest in new Nintendo hardware, Nintendo's decision to stick by or drop Wii U prematurely will play a major part in how well their next system does, at least initially. There are a lot of other factors Nintendo will need to nail, but sticking by Wii U and grinding out profit is far more sensible than dropping the system prematurely.

Cutting and running will be a disaster for Nintendo. It's what Sega tried when they saw Genesis sales declining, quick-fix solutions to eroding marketshare rather than making long-term decisions based around the future profitability and health of their platform business. Nintendo won't be happy with Wii U's peformance, and Iwata did say at the beginning of this year that so far Wii U and Nintendo have failed. But they won't be panicking about marketshare the way Sega did. Change is a-coming, it just isn't going to come while Nintendo have a niche of Wii U owners they need to keep happy and stockholders who need to see profits posted.

Heh, comparing Sega to Nintendo? And Nintendo retiring from the home console market?  And those ideas some people are expressing here...

I've already called out the Moderators attention on this matter, flame-bait threads that achieve nothing except having Jerry Springer Show quality topics, all I got was a ban!

Dreamcast sold record numbers before Playstation 2 released. After PS2 was released it barely sold anything. But Wii U continues to sell at a steady pace.