That's the thing though, Nintendo doesn't have any ambitions of being Sony/Microsoft big. They're not looking to grow the company.
Okay if that's really how they feel then I 100% agree with you. It seems insane to me that they wouldn't want to grow but then their management does seem a bit strange. So if they have no plans for growth the plans they announced at the meeting are basically that they're going to keep with business as usual except license out a few properties and create demos on smartphones as ads for their real hardware/software and that they'll give out some stock buy backs to try to prop up the stock price in the meantime. Who knows, maybe it will work...it doesn't sound like a particularly great plan to me (though any plan is better than what they've done over the last year).
What really throws me off about the smartphones/tablets plan is that...who the

is going to download their mobile advertisements?
Someone correct me if I'm wrong, but I think it'll keep their stock from falling for the short term.
The only part that slightly worries me is that they would have 14% less cash -- about $7.4 billion left. Obviously, that's still a lot, but their losses will affect them a little bit more. But losing 15 million is still a couple orders of magnitude from being actually worrying.
Compared to say, Apple's buyback, but they're still generating cash.
Exactly. They could basically set up an unlimited buy order at $15 or something and ensure that their stock price never falls below that price (a floor to the price). That would help keep their investors happy because they wouldn't see their stock price continue to collapse. On the other hand, if they burned through all their cash trying to maintain that price point, they would have to authorize additional repurchases. That probably wouldn't happen and they probably aren't going to set up an order like that (at least at that level) anyway though you never know. Their stock action is really odd looking, it kind of resembles a penny stock. If I had confidence in their turn around plan I'd buy some of their shares but I don't have confidence right now.
It is (like many things) a balancing act. Warren Buffet has no qualms with stock buybacks and in fact recommended them to Apple when Apple was at $80. Apple is currently buying stock back, but they are doing so as a way to avoid tax liabilities for off-shore funds.
Conversely, IBM has been buying back stock for quite a while and reduced the outstanding stock level by something like half in the last few years. IBM has been doing so as a way to prop up earnings per share and hopefully prevent stock collapse.
Nintendo seems to be doing the latter, which isnt ideal, but isnt the end of the world and is supported by some of the largest investors around. . . assuming Nintendo has some plan to turn around the year over year losses.
This is it exactly, they're basically attempting to prop up share price to make their investors happy. If you own a lot of stock in the company and plan on selling a lot....lets say 5 million shares...to pay for estate taxes and you see your shares drop in value from 15 each to 8 or 9, you're going to be pretty upset and that's likely to get management thrown out. To some extent this combined with his pay cut almost seems like a plan management cooked up for their own protection.
It might and again for certain institutional investors its a great thing, but this presumes the company has a stable future after this unstable period. Otherwise stockholders could fear a future bankruptcy if nothing else changes.
Stock buybacks presume there isnt anything better you can do with the cash, which is a BAD implication for a company in the money making business. Though Nintendo just went through a large series of capital expenditures (their new buildings) and spent a large amount of cash in R&D. It's not clear that there are other stones to turn in terms of investment.
So in summary, stock buybacks imply bad things about a company, but if there is confidence in the long term its just a symptom of the rough times.
So. . . for Nintendo, which is it?
For $1,200,000,000 they could have funded a massive number of exclusives from US and Japanese developers. Enough that almost all gamers would have wanted their console. As crazy as it seems, it almost seems like RedvsBlue might be correct with his assertion that they have no growth plans. I mean, estimates are that Skyrim cost about 85 million dollars to make and most games are much less than that to the tune of 20 or 30 million. So you can imagine that if they went to Bethesda and said, "Here's 100 million dollars, make us a hell of a game that the west will love" that Bethesda would would be happy as shit to make. They could make 8-9 Skyrims with the money they're throwing away on buybacks. Grand theft auto cost about 250 million and like 5 years to make. Just imagine how many exclusive shooters, WRPG's, etc they could have made. That doesn't even take into consideration JRPG's which would be much cheaper to make since the development in Japan is cheaper. It seems crazy to me that they admit they don't understand the Western market then instead of creating games that are popular in the west (or even in Japan), they burn through cash to prop up the share price.
edit: Keep in mind that I'm mostly referencing the big blockbuster games here. 2-3 of those would go a long way. Normal games that cost $20 million to make, they could make 60 of them for the kind of money they're spending on this buyback.
So, basically, you want the Wii U to be a clone of the PS4/X1 with the same sort of specs, controller, online system, and games. Even if Nintendo could pull that all off and still make a profit (which is unlikely), that would mean the Wii U (or whatever it was called instead) would still be the 3rd option behind those other two systems. Why buy that when you are used to playing on the other systems? Most casual Madden/CoD type players wouldn't make the switch - they'd stay with MS or Sony depending on where there friends were.
So that's why Nintendo had to do something different. You may not like what they've done differently, and it may end up not working out, but they simply cannot compete straight-up as a Playstation/Xbox clone with Mario games tacked on. People on CAG continue to confound me. They'll say the Gamecube was a failure and then bag on the Wii U for being different. The Gamecube tried to follow the clone approach and while it was a great console (IMO) and made a moderate amount of money, it was clear by the end of that generation that it wasn't the way to go moving forward for Nintendo.
Sure, like a lot of CAGs I was disappointed in the Wii. But they fixed the biggest issue with the Wii U (HD graphics). Yeah, it's no powerhouse, but if you've played Mario 3D World, it is clear it gets the job done (unlike the Wii).
Gamers are fickle though, they'll complain about the gamepad one day but if enough games come out for Wii U that they want, they'll buy it anyway. As I mention above, they could fund dozens of exclusives for the money they're spending on that stock buyback. It's why I said that Iwata is a bad CEO. Most gamers would buy the Wii U in a second if they saw it had lets say...FIFTEEN (exclusive) games they want on it...
edit: Then of course there's Eastern European developers like the guys that make The Witcher and the Metro games. Their cost structure is 1/2 that of games made in the US and their break even cost is half as much. They could have made so many games with this money.