Nintendo Co. Ltd, the world's largest gaming company by revenue, warned it would post operating losses this fiscal year and blamed the poor sales over the key holiday season for its woes.

It also slashed its sales target for the Wii U, its eighth generation video game home console. Nintendo is the maker of the iconic Donkey Kong and Super Mario Bros. games.

Nintendo said it expects a loss of $240 million in the year to March, a massive drop compared to an earlier $539.5 million net profit forecast. It also projected annual revenue to drop 36 percent.

Nintendo said it expected to sell only 2.8 million units worldwide of the Wii U, less than a third of it earlier prediction for 9.0 million consoles. Its ambition to sell large numbers of WiiU during the holiday season to boost faltering sales were stymied, forcing it to cut forecasts as demand for the Wii's high-margin software fell.

Demand was weak in the important European and US markets. Nintendo cut prices for the Wii U and its 3DS handheld console to boost weakening sales. It launched the Wii U in late 2012 hoping to repeat the original Wii's massive success.

Nintendo President Satoru Iwata said during the year-end shopping season, "we weren't able to lift sales momentum for the Wii U."

The decrease in game software sales is having the biggest impact on profit, he said. Iwata pointed out that his duty, more than anything else, is to revive Nintendo's business momentum.

In contrast, rival Sony saw record demand for its new PlayStation 4 console, which sold more than 4.2 million units by the start of the year. Microsoft has also seen robust demand for its Xbox One console that sold over one million units in the 24 hours after its November release.