Don't think you can blame him much for the poor showing, the team just didn't work in general. I also seem to remember Prandelli (or maybe it was just journalist speculation) before the tournament started saying that Immobile and Balotelli wouldn't work together, but that statement went out the window before the Uruguay game.
I agree he seems he needs a certain type of team to be most effective though, but you can say that for many players, doesn't necessarily mean anything bad.