Sega forecasts return to profit

Sega, maker of Sonic the Hedgehog, has suffered from intense competition

Japan's struggling game-maker Sega has reported record losses after it was hard hit by poor sales of its Dreamcast games console.

The company has since decided to end production of the console.

Net losses for the financial year to March 2001 soared to 51.7bn yen ($422m), compared with a 43bn yen loss a year earlier.

But the company, which is now to focus on selling game software, predicts a return to the black in the next financial year - for the first time in five years.

"In this period, we suffered losses because of extraordinary losses resulting from sluggish sales of Dreamcast," the game-maker said.

Losses soar

Lacklustre sales of home video games and an 81bn yen one-off loss from Sega's decision to scrap Dreamcast helped push the company further into the red, it said.

This was despite a 78bn yen profit from a gift donated by its former president Isao Okawa, who died of a heart attack in March.

Looking ahead, Sega predicted profits after tax of 2.1bn yen for the current financial year.

It said that it planned to concentrate on producing software for other manufacturers' consoles, ranging from Sony's Playstation and Microsoft's Xbox to Nintendo's GameCube.

It will also deliver Sega games to Palm handheld computers and NTT-DoCoMo's fast-growing i-mode service, which allows subscribers to browse the internet on their mobile phones with its "always-on" connection.

Shares in Sega rose 0.18% in Tokyo on Tuesday to 2,815 yen. The shares have quadrupled in value since hitting an all-time low of 690 yen last October.