Official: Sega Reports Large Losses, Irimajiri to Step Down

From FGN Online, there is no mention in this article about Irimajiri’s official resignation:

For the period ended March 31 2000 turnover was 339 billion yen ($3.1 billion), up 27.5 percent on last year’s result. The company posted a net loss of 42.9 billion ($400 million) – the same as ’98/’99.

According to CTW, Sega explained that slow Dreamcast sales in Japan took an “enormous toll on results for the term”. The company also said that killer titles such as Shenmue, Space Channel 5 and Virtua Striker 2 Ver.2000 fell below projections due to market maturity.

Looking ahead, Sega projects a return to profitability, due to Dreamcast sales topping 10 million units, cost cutting exercises and a company restructure.

However, Bloomberg is reporting that Isao Okawa has been given the duties as president, replacing Shoichiro Irimajiri, to become vice chairman at Sega. There is a bit more to this story, more on those facts over the weekend.

Reaction at the DC Tech Pages was mixed. Johnny Awesome had a optimistic opinion:

Wow. Not bad really. Software is selling at over 5:1. This holds a lot of promise for the future.

I think that 1 million units in the US from January – March is pretty good. It’s a slow sales period.

Another 5 million this year is totally reasonable, and with 11 million units out there by March 2001, I don’t think it’s even possible for DC to lose money this year.

Despite the media’s claims and all the doom and gloom talk, 11 million units is very respectable in from Nov ’98 to Mar ’01; a little over 2 years.

If Sega actually makes their projections this time they will do very well.

Tails:

Wow, it seems Sega still has major problems. I thought they might have gotten over these now the Dreamcast is doing well in America and Europe… but it seems not, mostly because of Japan?
I hope what Sega’s doing by splitting it’s development teams up helps reduce the losses.

Sony won’t sell 2.5 million consoles in 6 months? Hmmmm… I think they might. It will take a little while before people realize the Playstation 2 isn’t all it’s hyped up to be.

When the gamers actually have their PS2’s, and realize they want to play Quake 3 online, Phantasy Star Online, NFL 2K1, and Space Channel 5 too, maybe they will snap out of the Sony dream.

Hardcore 238: I honestly have no idea what anyone would be depressed about. All in all, this is really good news. There is a old saying that applies here, its “slow and steady stays the course.”

if you look at the numbers, its more than plain to see that SEGA losses are less than they predicted . . . which if you did not know, is a very good thing. Also the fact that they were able to so accurately predict just how much the losses were give great credence to their predictions of profits for the end of the current fiscal year. Believe me when I tell you ladies and gents, the storm is almost over, the light can be seen at the end of the tunnel and SEGA’s dark days are almost behind them.

Something else of note, just take a look at just how of the loss had nothing to do with Dreamcast. Clearly a full 33% of the total loss came from the liquidation of the amusement divisions that were not bringing SEGA any profit anyway . . . and coincidentally, if you recall, were one of the major causes to account for the large losses the SEGA posted last year.

Mentioning last year, it is wonderful to note that SEGA lost the same this year as they lost last year. What’s good about that, it shows that they are getting their act together and taking control of the losses. If they were not, the losses would be spiraling upward, not remaining level. While on the subject, SEGA (and its investors) technically lost less this year than they lost last year, or did no one notice the comparison of how much the loss/share ratios?

It is also fascinating to note that SoJ only missed hardware sales of Dreamcast by 150,000 units. They got close. I think what is not being said here, is how much they lost due to slowing sales in DC software in Japan, as this would affect the bottom line a lot more significant than how many systems were sold.

Also, while SEGA selling “only” 5.8 million Dreamcasts in a little under a year and a half (Nov 1998 – Mar 2000) may seem like small potatoes to some of you here, just remember this, at about the very same point in PSX’x life cycle (actually a full 1.5 years), Sony had only managed to sale 1.5 Playstations (worldwide). I do not know about you, but I see a significant gap here, and more than enough hope for not only the future of Dreamcast but SEGA in general. Also with a 5:1 software ratio and a 3:1 software ratio by new adaptors, I honestly do not see why SEGA has seen the last of its financial woes.

If they hit their target of system sales, 11 million by end of 2000 fiscal year (March 31, 2001), and they continue to sale software at the 5:1 (or even higher ratio due to SEGA.com‘s instant rebate policy), not only is there no reason to even think that SEGA will not post profits for the next year, but also, no matter if PS2 is outselling them, Dreamcasts will still be selling at a breakneck speed that up until now, was unheard of in the videogaming industry. If Sony sets the pace that they say they will (I think that they won’t), and SEGA continues at its current pace, then by Autumn 2001, there is not going to be a lot of potential market mind share left for Dolphin or X-Box. This again is good news for SEGA. It means that they may not place first in this generation, but that they are going to place a solid 2nd. Which is a lot more than anybody (except for us) ever gave them credit for. And in all honesty, if they play their cards right, a solid 2nd place is all they are going to need to take the top spot in the generation that will be lead by Dreamcast 2. Again a far cry from the belly-up motion that everyone keeps saying that SEGA is headed.

As I stated before in another thread, when SEGA puts out news, they usually just put out the bare facts. They don’t try and doctor them up like some of SEGA’s competition (example — EA surreptitiously takes investors minds off of their losses by sidetracking them with the deal between EA and AOL). SEGA leaves it up to you to make with the facts what you will. For those of us looking for the end of SEGA, no matter what SEGA does, then that is all we will every see. I’m not going to tell you that SEGA is doing awesome. I’m not going to tell you that SEGA is unstoppable. I’m not the one wearing the rose colored glasses. But I will tell you that SEGA has a solid chance and that they are not to be written off. for those who write them off so easily . . . humph, well. Just know this, last year SEGA made predictions about where they would be this year. Even though the predictions were off, they were not far off. And I think that says a whole lot in an of itself. A betting man would pay very close attention to where they say they will be next year.

More info this Memorial Day Weekend…