Sega Posts Profit, Ending 5-Year Streak Of Losses

Sega yesterday reported a profit for the fiscal year that ended March 31, ending five consecutive yearly losses.
Sega attributed the good results to its arcade business, which climbed 16 percent to 61 billion yen. There was bad news in the mix too, however: game software sales fell 21 percent to 66.6 billion yen, operating profits dropped 34 percent from a year ago, and sales declined 4.4 percent. Sega's recently appointed president, Hisao Oguchi, used the occasion to hold a news conference today in Japan, where he outlined new business plans. First, he leveraged the good news about the firm's arcade business by announcing plans to open new arcades that have a more adult atmosphere, which the company hopes will broaden its customer base. Oguchi's also announced an aggressive goal to double its game sales within five years. "Given our development resources and the expected launch of next-generation game consoles, I believe we can double our sales of packaged software from the current level of around 10 million units in about five years," he said. But Oguchi was vague about how that strategy would be executed. He merely restated that Sega will work with ESPN to market its sports games -- which the company had previously announced. Specifics about how it intends to compete against EA's powerful sports franchises was left out of the message. Sega's shares close up about 4 percent today on the news. But some perspective is helpful: the company's shares are still off almost 45 percent since the start of 2003.

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