Sega Cuts 20% of U.S. Staff
Even more [bad] news in about Sega, this time affecting the workers at Sega U.S. HQ in San Francisco. Sega has confirmed information that it will cut a whole 20% of its workforce, that being approximately 90 jobs out of 450. This is most likely due to Sega’s falling revenue, and the merger with Sammy. Full details in the Reuters report below.
Sega to Cut 20 Percent of U.S. Headquarters Staff
LOS ANGELES (Reuters) - Japanese video game publisher Sega Corp. on Friday said it would cut 20 percent of the staff at its U.S. headquarters in San Francisco, or about 90 jobs, as its reorganizes its North American holdings in the face of an increasingly unpopular merger.
Sega, which is in the process of combining with Sammy Corp. 6426.T , a maker of pinball-like “pachinko” gambling machines, said it will organize its North American operations into three units under the umbrella of Sega Holdings.
Sega Entertainment will be responsible for original content, Sega Sports will develop the company’s well-regarded sports games like its “2K” football titles and Sega Corporate will handle corporate, sales and distribution functions for the sports and entertainment units.
Sega shares closed nearly 16 percent higher in Tokyo on Friday after a report in the Asian Wall Street Journal speculating that both Microsoft Corp. and Electronic Arts Inc. were considering stepping in as “white knights” to bid for Sega.
Both Microsoft and EA have denied the report. Last month long-time Sega of America head Peter Moore left the company and joined Microsoft three days later.
Investors in both Sega and Sammy have given a thumbs down to the merger plan, sending shares in both to all-time lows.
“Many investors and employees at Sega believe Sammy is not an appropriate partner and that the merger would bring little benefit to Sega. Now, it is not sure if the deal will go through,” Morgan Stanley analyst Shunji Yamashina said.
The Sega-Sammy merger, set for an October closing, has been widely seen as a takeover of Sega by Sammy even though Sega, at the time the deal was announced, accounted for 54 percent of their potential combined market value of $2.4 billion.
An acquisition of Sega would be relatively easy for either Microsoft or EA. Microsoft has more than $40 billion in cash on hand, while EA has more than $1 billion plus a shelf registration statement giving it the right to sell up to $2 billion in debt and securities.
In its most recent fiscal year, ended in March 2002, Sega reported revenue of 206.3 billion yen ($1.75 billion). For fiscal 2003 it expects revenue of 195 billion yen ($1.65 billion). ($1=118.07 yen) (With additional reporting by Yuka Obayashi in Tokyo)
Source: http://www.reuters.com
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