Sega: Takeover Target?

Analyst says financial troubles make SEGA a "sitting duck"

Posted by Staff
Sega: Takeover Target?
Following SEGA's recent posting of a massive financial loss, analyst Bruce Everiss has said that the company is "gaming's juiciest takeover target".

Everiss, who was a senior marketing exec at Imagine and Codemasters and the publisher of the short-lived Liverpool Software Gazette, states:

"So now they are a sitting duck to be taken over themselves. And there can be very few juicier targets. Given good management and that heritage of IP, Sega would be a license to print money. And the icing on the cake is that the buyer would get a very strong foothold in the Japanese market."

Sega Sammy Holdings - the holding company for SEGA and the "pachinko" and "pachislot" gambling machine maker Sammy - said last week that it expects losses for the 2007/08 financial year to total 26 billion (123 million). That compares to a previously forecast net income of 1 billion (4.8 million). As a result, the company announced that it will cut 400 jobs at SEGA.

SEGA executives see the increased regulation of gambling uses for pachinko systems (for which SEGA expects to see profits decline by 85%) along with the impact of the Wii on amusement arcades as primary factors in their financial situation.

On the software front, however, the Wii has proved a boon. "In the consumer business", the company said in a release, "overseas videogame software sales were up compared with the same period in the previous fiscal year with strong sales of Mario & Sonic at the Olympic Games". Sales in Japan, however, were not as strong.

As well as the job cuts, SEGA announced back in November that it would close 80 of its 430 amusement arcades by March.

Source: Seeking Alpha


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