Sega, the creator of Sonic the Hedgehog, expects profits to be squashed this year after the slow release of new titles and poor returns from the Tokyo stock market.
The Japanese firm dumped its loss-making Dreamcast console a year ago and instead was going to focus on becoming the world’s leading maker of video games.
However, there were delays in providing new products for Sony’s PlayStation 2 and Nintendo’s Gamecube. A slump in demand for games in Japan, Europe and the United States left software sales in the half year to September 1.6 million units short of targets.
With strong competition from other software houses and continued contraction of its key markets, Sega revised down its full-year net profit from Y18bn (£94m) to Y5bn.
”We miscalculated financial targets for this year because of over-confidence stemming from results last year and a lack of experience as a third-party software publisher,” said Sega president Hideki Sato.
The poor results were made worse by a Y4,8-billion write-off after losses on the Tokyo stock exchange affected the company’s equity portfolio. The Nikkei share index has reached 19-year lows. – Guardian Unlimited (c) Guardian Newspapers Limited 2001