Video game giant Nintendo has cut the sales forecast for its much-hyped Wii U console, but still expects the weaker yen to drive an annual profit.

The Japanese company said it has returned to profit in the nine months to December, and raised its full-year earnings forecast as it looks to shake off the previous year's loss. When it comes to its new Wii U console, however, Nintendo cut its sales expectations for the fiscal year through March. Moreover, the company also slashed its overall revenue projections.

Nintendo has been putting its hopes on the Wii U console to turn its fortunes. On Wednesday, Jan. 30, the Japanese company said it climbed to a net profit of 14.54 billion yen ($160 million) from a net loss of 48.35 billion the previous year. Nintendo has also raised its profit target for the fiscal year to March to 14.00 billion yen, a notable increase from the previous target of 6.0 billion yen.

On the other hand, the company said its profit upgrade was mostly due to a weaker yen, not whopping success. Nintendo also cut its revenue forecast for the fiscal year by 17 percent to 670 billion yen and cautioned that it would post an operating loss.

The new Wii U console sold out in the U.S. during its first week of launch back in November, but now it is expected to sell four million units through March. The number is down from a previous estimate of five and a half million units. Meanwhile, the original Wii console sold more than 99 million units worldwide since its launch.

Furthermore, Nintendo also slashed its software sales expectations for the new Wii U, and cut its target for the Nintendo 3DS - the world's first video game console sporting a 3-D screen.

Competition with Sony and Microsoft, makers of the PlayStation and Xbox, respectively, is getting increasingly fiercer, and the three giants are fighting to dominate a sector worth roughly $44 billion annually.

Nintendo, Sony, and Microsoft are facing tough economic environments in their key U.S. and European markets, and they are also struggling to keep up as cheap, or even free downloadable games keep surfacing for smartphones and tablets.