Sega Loses Almost $50M in Q1 2012

Sega Loses Almost $50M in Q1 2012

by July 29, 2011

Parent Company Reports Net Income Loss of Over $28 Million

The earthquake and tsunami that rocked Japan in March had a significant impact on earnings for Sega and the parent company, Sega Sammy Holdings.  After several quarters of posting profit, the mothership today reported a net income loss of some ¥2.2 billion, or $28.8 million, for the first quarter of fiscal year 2012.  That’s compared to a more than $90 million profit the company posted in Q1 2011.

“During the first quarter of the fiscal year ending March 31, 2012, some uncertainty prevailed in the Japanese economy due to various impacts in the aftermath of the Great East Japan Earthquake that took place on March 11, 2011, including the concern for the availability of parts and materials and the struggle to cope with the shortage of electricity supply which is now likely to be prolonged,” said the earnings report.

The bad news in all the facts and figures is that it was the Consumer Business division–the area Sega falls under–that dragged the entire company down.  That division posted a Q1 operating income loss of more than ¥3.8 billion, or close to $50 million.  Consumer Business lost money last Q1 as well but not nearly as much; the loss was only $8.2 million in Q1 2011.

“In the home video game industry, the demand was generally weak in the U.S. and European markets due to the headwind like sluggish personal consumption,” said Sega Sammy’s consolidated financial statement.  “The Group needs to adapt to changing business environment in which the market demand for new content geared to social networking service (SNS) and smartphone is expanding.”

In all, just 2.3 million Sega games were sold in the quarter, which is down from last year and down from earlier expectations.  Playstation 3 game sales made up the lion’s share of sales for the quarter with 910,000 sold, though Catalogue titles, the re-released fare, wasn’t far behind with 730,000.  Wii and XBOX360 game sales lagged far behind.

Because of continued uncertainty in Japan and the general economy, Sega Sammy expects Consumer Business to lose even more in the 2nd fiscal quarter, to the tune of ¥5 billion–or over $64 million.  The company advised to expect a total loss in whole of ¥3 billion for next quarter.

Sega Sammy’s stock price remains unchanged on the pink sheets as of this article’s publication, standing at $5.31 a share.