Sega withdraws from loss-making ISP operations

TOKYO: Japanese game software publisher Sega Corp said on Thursday it would

withdraw from its loss-making Internet Service Provider (ISP) operations by the

end of March in an effort to improve profitability.

The move is in line with the company's pledge in November to restructure or

consolidate its unprofitable businesses such as ISP operations and arcade

operations in the United States.

Sega chief operating officer (COO) Tetsu Kayama told a news conference that

its US ISP unit, Sega.com Inc, had already filed a Chapter 11 bankruptcy

petition and its European unit, Dreamarena, had begun liquidation procedures. As

for domestic businesses, Sega plans to sell its stake in its ISP and online game

service provider unit Isao Corp.

"We have decided to leave the management of Isao to CSK Corp and Isao

itself. Isao will no longer be our consolidated company next business

year," Kayama said, without disclosing further details of the share sale.

Sega has lost tens of billions of yen in the Internet provider business over the

past few years, but it will be rid of the problem by March, Kayama said.

Sega, which has been transforming itself into a game software house from a

game console maker since early last year, is stepping up its restructurings to

achieve its mid-term goal of generating more than 45 billion yen in operating

profit in 2003/04.

"We are also working on the restructuring of the arcade business in the

United States. The results of the restructuring are in sight," Kayama said.

In November, Sega said it had managed to squeeze out a 5.78 billion yen

operating profit for the six months through September 30, returning to the black

for the first time since it started unveiling group interim results in

1999/2000.

Sega, which ditched its loss-making game console operations about a year ago,

posted a group net loss of 20.87 billion yen for the six months through

September 30, better than its loss of 32.46 billion yen a year earlier.

Asked if Sega could keep its promise to post 10 billion yen in group current

profits for the current business year through March 31, Kayama said: "We

believe we can stick to our commitment."

(C) Reuters Limited.