Sega Sammy revises revs down, profits up

Publisher says weak NA software performance led to lower-than-expected sales, but slot machines raise income margins; former Sega Toys employee under investigation.

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Activision isn't the only publisher tinkering with its projected earnings today. However, whereas Activision's revision fell entirely within the positive column, Japanese gaming giant Sega Sammy's update today was of a more mixed composition.

Sega was expecting more from its games in North America.
Sega was expecting more from its games in North America.

For the April 1, 2009 to March 31, 2010 quarter, Sega Sammy now expects net revenues of ¥380 billion ($4.08 billion), down 9.5 percent from its previous estimate of ¥420 billion ($4.51 billion). In light of the revision, Sega Sammy is now expecting total revenue to slip 11.5 percent from the year prior, where sales stood at ¥429.2 billion ($4.61 billion).

On the other hand, Sega Sammy significantly revised its profit projections upward today. Having previously forecast earnings of ¥15 billion ($161 million), the Japanese publisher now anticipates profit to hit ¥18 billion ($193 million), a 20 percent increase. Sega Sammy's revised bottom line represents a dramatic reversal from the 2008-2009 fiscal year, when losses amounted to ¥22.8 billion ($245 million).

Sega Sammy attributed its lowered revenue outlook to soft game software sales in North America, as well as lethargic business at its amusement facilities operations in Japan. Though the publisher called out no specific titles, Sega launched PlatinumGames' Bayonetta during its January-March quarter in the US, a game that has posted platinum sales.

Other releases during the period include Rebellion's Aliens vs. Predator, Sonic & Sega All-Stars Racing, Napoleon: Total War, and Resonance of Fate. Total software units are now expected to come in at 26.3 million for the year, down from previous projections of 29.7 million.

As for the rise in profit, Sega Sammy said that it has experienced booming margins in its pachislot and pachinko machine businesses.

Sega Sammy also said today that it has begun an investigation into a former employee of its Sega Toys division who "conducted multiple inappropriate transactions." The publisher was light on details of the infraction, though it did say that the activity could end up costing it an estimated ¥500 million ($5.37 million) in liabilities. This figure was not included in today's earnings revision, and Sega Sammy expects to make a subsequent announcement once the exact amount is determined.

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