Is Sega Corp's Sonic the Hedgehog facing a shotgun marriage? The largest shareholder of Sega, creator of the Sonic game character, denies media reports that it's pushing Japan's No. 3 video-game maker into a merger with Sammy Corp, a maker of pachinko pinball machines. It also denies reports that Microsoft Corp and industry rival Electronic Arts Inc proposed rival bids.
CSK Corp, one of Japan's biggest information-technology services companies, may have good reason to consider offloading its 22 percent stake in the game unit, investors say. Sega has had five consecutive years of losses and its shares have plunged by four-fifths since May last year, dragging down CSK's bottom line.
"Sega's fate hinges on who CSK will sell its stake to," said Yoshihisa Okamoto, who helps manage ?221 billion (US$1.8 billion) in assets at Fuji Investment Management Co and doesn't own Sega shares.
A merger or sale would relieve the pressure on CSK's profits, meaning Sega, which once wrestled Sony Corp and Nintendo Co for supremacy in the US$20 billion a year game industry, may find itself with a new partner whether it wants one or not, investors say.
The Feb. 13 announcement of Sega's combination with Sammy prompted reports that Microsoft, maker of the Xbox game console, and Electronic Arts, the largest US game software maker, were contemplating bids for a slice of Sega.
Though CSK and Sega insist they haven't held talks with either of the US companies, doubts about Sega's future persist.
"The video-game industry has entered a period of attrition," Fuji Investment's Okamoto said. "The question that may determine whether a software developer survives is whether it has enough cash to develop winning games."
Speculation over Sega's fate underlines its waning ties with CSK, whose president, Masahiro Aozono, is focused on restoring the group to profitability.
CSK, a computer-systems developer and Web consultant, already considers its Sega stake to be "purely an investment," Aozono told analysts last year, suggesting the company is prepared to sell if the right offer comes along.
"We have not yet decided what to do with the [Sega] stake," CSK spokesman Hitoshi Tani said in an interview last week.
A sale would have been unthinkable three years ago, when CSK was still headed by its late founder, Isao Okawa.
Okawa, one of the fathers of Japan's software industry, led CSK's purchase of Sega in 1984 and donated ?85 billion worth of securities from his personal fortune to the company in March 2001, shortly before his death. That helped to cover the losses Sega suffered after abandoning its Dreamcast game console.
Merging with Sammy would bolster Sega's finances. The gamemaker has ?83.6 billion of debts, including ?50 billion of zero-coupon bonds that fall due next year, and a debt-to-equity ratio of 115 percent as of March last year. Sammy has virtually no debt and an operating profit margin of more than 30 percent.
Some analysts, though, question whether a maker of pachinko machines, which are associated with illegal gambling, is the right partner for a gamemaker whose Sonic character is designed to appeal to children.
The US Department of State yesterday criticized Beijing over its misrepresentation of the US’ “one China” policy in the latest diplomatic salvo between the two countries over a bid by Taiwan to regain its observer status at the World Health Assembly, the decisionmaking body of the WHO. “The PRC [People’s Republic of China] continues to publicly misrepresent U.S. policy,” Department of State spokesman Ned Price wrote on Twitter. “The United States does not subscribe to the PRC’s ‘one China principle’ — we remain committed to our longstanding, bipartisan one China policy, guided by the Taiwan Relations Act, Three Joint Communiques, and
FATES LINKED: The US president said that sanctions on Russia over Ukraine must exact a ‘long-term price,’ because otherwise ‘what signal does that send to China?’ US President Joe Biden yesterday vowed that US forces would defend Taiwan militarily in the event of a Chinese attack in his strongest statement to date on the issue. Beijing is already “flirting with danger,” Biden said following talks with Japanese Prime Minister Fumio Kishida in Tokyo, in which the pair agreed to monitor Chinese naval activity and joint Chinese-Russian exercises. Asked if Washington was willing to get involved militarily to defend Taiwan, he replied: “Yes.” “That’s the commitment we made,” Biden said. “We agreed with the ‘one China’ policy, we signed on to it ... but the idea that it can be
‘TOO RESTRICTIVE’: Ending US sales of weapons that do not fall under the category of ‘asymmetric’ would hamper Taiwan’s defense against China, two business groups said Taiwan’s weapons procurement decisions are made based on its needs, and are not influenced by individual arms dealers, the Ministry of National Defense (MND) said yesterday after two US business groups questioned a US official’s comment on arms sales to Taiwan. US Deputy Assistant Secretary of State for Regional Security Mira Resnick told the business groups via video link on Saturday that Washington would adjust the types of weapons sold to Taiwan and end “most arms sales to Taiwan that do not fall under the category of ‘asymmetric.’” The American Chamber of Commerce in Taiwan and the US-Taiwan Business Council on Monday
Local COVID-19 cases are expected to continue rising in the upcoming week, the Central Epidemic Command Center (CECC) said yesterday, as it reported a record-high 85,310 new domestic cases and 41 deaths. Daily case numbers had remained in the 60,000s for the past six days before surging about 30 percent yesterday, said Minister of Health and Welfare Chen Shih-chung (陳時中), who heads the center. Centers for Disease Control (CDC) Deputy Director-General Philip Lo (羅一鈞), deputy head of the CECC’s medical response division, said the number of polymerase chain reaction (PCR) tests conducted on Tuesday also marked a record-high of 112,915, with a