TOKYO -Citing price cuts of its Dreamcast game machine in the United States and Europe, Sega Corp. said it expects to post a net loss of $203.8 million for the fiscal year ending March 31, 2001. This figure contrasts with an earlier estimate of a $13.8 million gain for the fiscal year.
Sales for the full fiscal year are expected to come in at about $3 billion, 4.8 percent below the previous estimate of $3.1 billion.
Not only was Sega unable to cut Dreamcast production costs to offset the sales price cuts, competition from Sony's PlayStation2 also hit hard at Sega's earnings. However, Dreamcast sales are expected to pick up in the face of expected PlayStation2 shortages during the holiday selling season.
Sega now expects shipments of Dreamcast during the holidays to exceed original estimates, moving more closely to the company's target number of 10 million units by March. At the same time, Sega slashed the suggested retail of Dreamcast in the United States to $149.95 from $199.
Sega's competition will intensify even further in the second half of next year when Microsoft launches its Xbox game console and Nintendo rolls out its GameCube advanced game machine.