Sega cuts work force by 28% to stop losses

Sega cuts work force by 28% to stop losses

Sega Corp Japan.,announced today it is cutting its work force by 28 percent in an attempt to become profitable by March 2002.

The company, which recently pulled out of the home video-game machine market to concentrate on making games, is also planning to sell off as many as half of its 58 group companies to gain sorely needed cash. The companies are either unrelated to Sega's core strategy or not profitable enough, Tetsu Kayama, chief operating officer, told analysts and reporters at a Tokyo hotel. Sega announced in January it will stop making its Dreamcast machine after March.

It said today it will continue reducing its work force from a high of 1,081 in January to about 700 by March 2002, all at Sega's Tokyo headquarters. About 200 people have already left, spokesman Munehiro Umemura said.

By next March, Tokyo-based Sega hopes to post both group and parent operating profits. For the fiscal year that ended last month, Sega expects a group net loss of 58 billion yen ($475 million) on sales of 260 billion yen ($2 billion).

Sales of Dreamcast, which went on sale in Japan in 1998, never kept pace with those of rival PlayStation2 from Sony Computer Entertainment, the game unit of Sony Corp. Dreamcast sales totaled about 2.3 million worldwide, while those for PlayStation2 total more than 10 million since March 2000.

Under a revival plan, Sega has shifted its strategy to making games for other machines -- PlayStation2, Nintendo Co.'s Game Boy Advance and the planned GameCube and Microsoft Corp.'s Xbox slated for sale this fall. The teams that created the hit Sonic the Hedgehog and Virtua Fighter series are working on GameCube games, and their titles will be announced next month, Kayama said.

Nintendo said Wednesday that the sale of GameCube was being delayed by two months in Japan until Sept. 14 because of parts shortages likely to hurt shipments of more than 50,000. GameCube, which will rival PlayStation2, is still planned for the U.S. market before Christmas. Nintendo, based in the ancient Japanese capital of Kyoto, makes the Mario and Pokemon games.

Sega President Hideki Sato said Sega still boasts fine game designers and the Dreamcast failed only because of bad marketing. But Sega Chairman Yoshiji Fukushima acknowledged that his company faces many problems.

''For Sega to recover as a great company is going to take some time,'' he said.

SOURCE: Associated Press