Sega Posts Another Loss

Sega Posts Another Loss

Sega Corp. posted a $169 million loss for the first fiscal half, largely because the plunging value of its investments more than offset the improvement in its video-game business after it abandoned the unprofitable Dreamcast console.

Sega, the makers of games like the "Virtua Striker" series, has been trying to sell itself as a creator of games for other machines after it decided early this year to stop making the Dreamcast.

Dreamcast sales never caught up with rival PlayStation 2 from Japanese electronics and entertainment giant Sony Corp. Getting rid of inventory at slashed prices, worldwide Dreamcast sales finally reached about 10 million this year. PlayStation 2, which went on sale last year, has already more than doubled that number.

Sega said it will likely sell all the remaining Dreamcast machines during Christmas. The leftover Dreamcast consoles total 40,000 in Japan and 230,000 in the United States, it said.

"We are determined not to lose our sense of crisis," said Sega president Hideki Sato. "We should never break our promise again."

Sega's loss was 20.87 billion yen in the six months ended in September versus a loss of 32.46 billion yen a year ago. Sales fell 18 percent to 97.79 billion yen ($795 million) from 119 billion yen a year ago, as it was forced to scale back under its turnaround plan.

It took a charge of about 29 billion yen ($236 million) related to its securities holdings that plunged in value because of the recent stock market fall. Many of these shares were donated by Isao Okawa, who served as chairman and president at Sega, in an attempt to bail out Sega from the Dreamcast fiasco. Okawa died in March.

Sega said it was hoping to rely on its established brand in Japan, the United States and Europe to grow as an entertainment company specializing in games.

It has been aggressively forging deals to create games for the PlayStation 2, Microsoft's Xbox that went on sale in the United States last week and Nintendo Co.'s new GameCube and older portable GameBoy.

But Sega still faces a rocky road to recovery.

It acknowledged worries about the future, given the economic slowdown at home and the United States in the aftermath of the Sept. 11 terrorist attacks. Much remains on how new machines such as the Xbox and GameCube sell, Sato said.

Sega now forecasts a group net loss of 15 billion yen ($122 million) for the full fiscal year ending in March. It had initially counted on making a profit. Sega expects sales of 200 billion yen ($1.6 billion), reflecting the success of its core game-software and arcade businesses.

In the previous fiscal year, Sega had a group net loss of 52 billion yen, mostly because of losses related to the Dreamcast.

Sega said it was starting to boost profits in its game business especially in Japan. It also hopes to expand into new areas such as music on the Internet, driving simulators and broadband karaoke downloads, said chief operating officer Tetsu Kayama.

While continuing to sell off unprofitable group companies, Sega plans to bring good game designers under its wing and strengthen research and development, he said.

Source: The Nando Times visit their website at http://www.nandotimes.com/