Sega and Sony stumble as sales tumble

Games and electronics titans Sega and Sony have posted gloomy results for their financial years ended 31 March.

Sega reported losses of Y45 billion and turnover slumped 19.8 per cent to Y266 billion. The company had previously forecast profit of Y1.6 billion.

It blamed problems in the US, UK and Australian markets for the loss.

In an attempt to stop the rot, Sega will cut its global work force by a quarter, the equivalent of 1,000 jobs. Other measures will include the closure of 101 amusement operations in Japan as it attempts to cut costs by 30 per cent.

Sony's results took a similar beating. Losses represented a 19.4 per cent slip in profit to Y179 billion and revenue that crept up 0.6 per cent to Y6,794 billion.

In a statement, Sony said: 'The recent volatility of the yen exchange rate has made it more difficult to manage the global procurement of materials, manufacturing, and sales activities as planned, and has adversely affected Sony's results, particularly for the second half of the finacial year'.

The statement added that the retailer's fourth quarter was particularly tough: 'Sales fell sharply and an operating loss was recorded. This was primarily due to significant decreases in sales and operating losses in the electronics and music businesses and much lower sales and operating income in the games business.'

The poor performance was attributed a number of factors, including decreasing sales in Asia, Russia, Eastern Europe and Latin America, as well as generally deteriorating gross profit margins. Other costs came from spiralling advertising and R&D expenses.

Sony also warned shareholders that the company faced a turbulent year, which would be reflected in the next set of figures. In the forecast for its next financial year ending 31 March 2000, Sega estimated a further four per cent sales tumble to Y6,500 billion and profit to drop 39 per cent to Y110 billion.