Sega Posts $169-Million Loss Despite Gains in Game Business

Sega Corp. reported a $169-million loss for its fiscal first half, largely because the plunging value of its investments more than offset the improvement in its video game business after it abandoned the unprofitable Dreamcast console.

Sega, the maker of Sonic the Hedgehog and other video game franchises, has been trying to sell itself as a creator of games for other machines after it decided early this year to stop making the Dreamcast.

Sega’s loss was $169 million in the six months ended in September, compared with a loss of $260 million a year ago. Sales fell 18% to $795 million from $970 million a year ago as it was forced to scale back under its turnaround plan.

Sega said it was hoping to rely on its established brand in Japan, the United States and Europe to grow as an entertainment company specializing in games. It has been aggressively forging deals to create games for Sony Corp.’s PlayStation2, Microsoft Corp.’s Xbox, which went on sale in the United States last week, and Nintendo Co.’s new GameCube and older portable GameBoy.

Sega now forecasts a group net loss of $122 million for the full fiscal year ending in March. It had initially counted on making a profit. Sega expects sales of $1.6 billion.