Apr. 28, 1999 - 12:15pm
Sega Makes Big Cuts

From FGN Online:

Sega plans to eliminate 1,000 jobs, amounting to around a quarter of its work force, due to its expected posting of a loss of 45 billion yen, or $378 million, for the fiscal year ending March 31st '98. The job cuts, according to Reuters, could be in place by as early as March 2000.

This shock revelation was further compounded as the console, video game and arcade manufacturer today informed it must lower fixed costs by 30 percent, with 101 Japanese amusement facilities closing as "part of a restructuring aimed at shoring up profitability." Sega had previously forecast a net profit of 1.6 billion yen, or $13.44 million, and attributed the surprise cuts to difficulties in its US, UK and Australian operations. The video games giant also predicted its sales for the '98 fiscal year would be 266 billion yen, or $2.23 billion, which is down a sizeable 19.8 percent from the previous year.

US credit rating agency, Moody's Investors Services, has even placed Sega's Ba1 long-term debt rating under review for a possible downgrade. The repercussions of these surprising moves have yet to come into effect, but Sega will surely be pinning all of its hopes on Dreamcast's US and European launch this September.

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