TOKYO -- The president of Sega Enterprises stepped down on Friday after the world's third-largest home video game maker reported its third annual loss in a row, despite a 27 percent jump in sales.
Tokyo-based Sega posted a group net loss of 42.88 billion yen ($398.1 million) for the year to March 31, little changed from a 43 billion yen loss the year before and in line with analysts forecasts following a profit warning by Sega in February.
At a press conference after the results, Shoichiro Irimajiri, 60, announced he would step on June 1 after two years as president, to be replaced by the company's chairman, Isao Ohkawa, 74.
Ohkawa is also chairman of CSK Corp., which owns 19 percent of Sega. Irimajiri, an executive vice president at Honda Motor Co. from 1989 to 1993, will remain at Sega as vice chairman.
"We accepted Irimajiri's request to resign to take responsibility for the losses," Ohkawa said. "We aim to revive the company by focusing on growing Internet-related services by using Dreamcast."
Sega lost money again despite a jump in group sales to 339.1 billion yen, from 266.19 billion the previous year, reflecting the start to sales overseas of the company's Dreamcast home video-game machine, the world's first 128-bit game player.
The news was released after the Tokyo market had closed. Sega's shares ended Friday at 1,660 yen, down 0.6 percent from the day before and off about 49 percent from January.
Analysts, however, questioned whether a management change would be enough to turn around the troubled game maker, especially given many had seen Ohkawa as the driving force in the company anyway.
"Sega has to come up with something more drastic to return to profit ... such as withdrawal from the home game machine hardware business," said Hirotoshi Murakami, an analyst at Kokusai Securities. "Otherwise, the company is likely to stay in the red."
Sega has been hit by intensifying competition at home from Sony's popular PlayStation series home video games. Sony launched its latest version of the console, the 128-bit PlayStation2, in March.
For the business year just ended, Sega shipped 1.1 million consoles in Japan, while Sony shipped 2.14 million PlayStation units and 1.41 million PlayStation2 units, according to data provided by each company.
That rivalry is expected to continue in overseas markets as Sony releases PlayStation2 in the United States and Europe on October 26, while Nintendo begins selling its next-generation, 128-bit console Dolphin -- which will replace its Nintendo 64 -- at the end of the year.
Nintendo, Japan's leading video-game maker, on Friday reported a 34.7 percent slide in profit for the year to March, as the negative impact of stronger yen more than offset robust sales of its its popular Pokemon game software.
Sega sold 3.8 million Dreamcast consoles overseas since beginning to sell the world's first 128-bit game player abroad last year, but heavy advertising costs slashed profit.
For the year started April 1, Sega forecast a group net profit of 1.5 billion yen on sales of 336.00 billion yen.
"Sega has so far failed to illustrate how it will profit from the Internet business where it has repeatedly put its focus on," said Morgan Stanley's Morita before the earnings were released.
"It may lose money again this year, given intensified competition in the industry and its weak market share in Japan."
