Sega Reports Profit, President Steps Down

During the period, the company posted a net profit of 3.05 billion yen, compared to a loss of 17.8 billion yen last year. On the down side, however, revenues fell 4.4 percent, to 197.2 billion yen. In its consumer software division alone, it posted an operating loss of 8.6 billion yen. What saved the company were earnings from the arcade division. In a related announcement, Sega's President, Hideki Sato, said he was resigning from his post. His successor was named immediately: Hisao Oguchi, the former CEO of Hitmaker (the studio formerly known as Sega AM3 R&D Division) which developed the Crazy Taxi series, Virtua Tennis, Virtual On, and other Sega games. The departure of Sato is seen as penance for Sega's mismanagement, including the revision of earnings estimates three times over past year and the collapse of the merger with Sammy. Company executives have said that a major goal for the coming year is to break even in its consumer software division. The company believes that will result from cost cuts, not revenue gains. Accordingly, Oguchi announced cuts, including a 10-20 percent reduction of development staff from its current level of about 1,000. For the current fiscal year, the company is forecasting a group net profit of 7.5 billion yen ($64.9 million) on sales of 193 billion yen. This was well below what analysts had been expecting.