Sega Sammy Asks For Voluntary Redundancies As Losses Loom

Publisher and arcade operator Sega Sammy Holdings has revealed nine month losses of ¥10.8 billion ($118 million) -– although this is actually an improvement on the previous year. Net income was up from a loss of ¥15.8 billion ($173 million) in the period ended December 2007. However, net sales decreased by 15.4 percent to ¥309 billion ($3.39 billion). Like many publishers, Sega Sammy credited its mixed results to the weak global economy -- Japanese companies have been hit especially hard by the strength of the yen and increasing unemployment. The unique Japanese economic problems were a particular issue for Sammy’s pachinko and pachislot coin-operated business, resulting in what was described as a "harsh business environment". As a result, net sales for the division stood at only ¥5.3 billion ($58m). The company’s home video game business, run largely under the Sega banner, also saw a leveling off of demand in Japan, although Western markets were described as holding firm. Sega says its Sonic Unleashed, Football Manager 2009 (aka Worldwide Soccer Manager 2009) and Mario & Sonic at the Olympic Games were the strongest performers. The company sold 21.1 million units of software over the period, of which there were 8.8 million in the U.S., 9.1 million in Europe and 3.1 million in Japan and other regions. Total net sales for the consumer business segment saw net sales of ¥96.2 billion ($1.1bn), with an operating loss of ¥5.65 billion ($61.9m). Following the results, the company has lowered its expectations for the full year, with net sales predictions down 7.4 percent to ¥435 billion ($4.77bn) and net income now expected to be a loss of ¥26.5 billion ($290m) instead of a profit of ¥5 billion ($55m). To counter this loss, the company is looking to solicit voluntary redundancies for around 560 Sega employees (from a total of 3,127). At the same time Sega Sammy will close 110 amusement facilities and reduce research and development costs by around 20 percent.