Sega Sammy Rises by Record as Earnings Exceed Expectations

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Sega Sammy Holdings Inc. soared by a record in Tokyo trading after analysts said earnings at the Japanese maker of game machines were better than expected.

Sega Sammy extended a 5.6 percent gain on Aug. 1, jumping 13 percent to close at 1,201 yen on the Tokyo Stock Exchange, the sharpest increase since its listing as a holding company on Oct. 1, 2004. It was the second-biggest winner among 1,719 companies on the Topix index.

The company said on July 31 its first-quarter net loss doubled to 10.5 billion yen ($97 million) from a year earlier, with a 22 percent drop in sales. It left its full-year earnings forecast unchanged.

``The quarterly results were not as bad as I had expected,'' said Toshitaka Uchiyama, head of Market & Technologies Inc., a Tokyo-based investment consulting firm. ``Investors are buying the shares because the company maintained its full-year forecast, thanks to strong orders for a new pachinko machine.''

Orders for the company's ``Hokuto no Ken'' pachinko machine exceeded 100,000 units, beating its estimate of 70,000 units for this fiscal year, Shigeo Mutou, an analyst at Mitsubishi UFJ Securities Co. said in a report on Aug. 1, in which he repeated his ``market perform'' rating. Sega Sammy disclosed the numbers in a telephone conference with analysts on Aug. 1 after results.

The company is strengthening its cost management, Daiwa Institute of Research analyst Koki Shiraishi wrote in a note to clients on Aug. 1. He maintained his ``outperform'' rating on the company, and kept his price target for the stock at 1,500 yen.

Sega Sammy shares have fallen 13 percent this year, compared with a 15 percent drop in the Topix.