I don't think Nintendo has the software experience it turn it around. I don't mean in making games; that they can do. It's all the other software: the operating system, the SDK, the store, the online component.
Nintendo is used to developing for old school consoles; boxes with discs or cartridges and where people play together in one room. But when nearly every person has a connected smartphone, an HD TV, and broadband the expectations for a system are well beyond what Nintendo has proven they can do.
Until they accept they don't have the skills to do that part properly or start to believe that it is actually important then they will continue to fail.
Nintendo can afford to play the long game here. They're still bringing in lots of revenue from their handheld systems. There's also still a lot of money in merchandising on their core franchises. One failed console isn't going to ruin them.
In my opinion, Nintendo's console problem stems mainly from a lack of vision and a failure to execute. These failings say nothing about their ability to do so, just that they were unable to do so in this case. The answer is simple, cut their losses, and try a different approach.
I don't think the concept of the Wii U is fundamentally broken, it just needs some work to entice third party development and to fix the hardware problems.
They can turn it around. I think it's a good bet they will.