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Sega shares surge ¥200 on PS2 code claim

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Sega is developing software for both the PlayStation 2 and Microsoft's Xbox, a Japanese newswire, Jiji Press, has claimed.

The report sent Sega's shares up 19 per cent to ¥1270. That represents the stock's biggest one-day gain in more than seven months, according to Bloomberg.

No sources were cited in the report, but its claims aren't surprising. Sega has been looking at shifting toward the software market and away from the hardware business for over a year, prompted by the poor sales performance of its Dreamcast console.

Indeed, last November, Sega Strategic Counsel Tetsu Kayama confirmed Sega's plan and its main goal: to boost Sega's console software marketshare to 25 per cent. Currently its code accounts for just 4.2 per cent of the market.

That target would put it ahead of market leader Nintendo, which has around 20 per cent of the console software business - which may explain why Nintendo appeared interested in buying Sega late last year. On its own, Sega simply can't achieve that level of growth without shipping software that runs on rival manufacturers' consoles.

Some kind of strategy along these lines is essential to Sega's future fortunes. It's currently expecting its current financial year, which will be completed at the end of March, will see the company's three-year loss-making streak continue, with a ¥22.1 billion deficit, despite earlier predictions that Sega would get back into the black. The loss is almost exclusively down to massive price cuts the company made in an attempt to shift unsold Dreamcasts.

Meanwhile, it has been pursuing the online services market with SegaNet, a multiplayer games-oriented ISP. SegaNet supports not only Dreamcast but PC users too, a sign that the company is looking well beyond its own console hardware. ®

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