via Reuters

Sega Sammy Holdings warned on Friday that it expects to lose 26 billion yen ($242 million) this business year amid slow sales of pachinko machines and said it would cut 400 jobs at its game software unit.

Sega Sammy, the holding company for video game software maker Sega Corp and "pachinko" and "pachislot" gambling machine maker Sammy Corp, also slashed its dividend forecast for the year to March by a quarter to 45 yen.

The forecast for a group net loss of 26 billion yen in the year to March marks a sharp reversal from its prior estimate for a profit of 1 billion yen. It cut its sales forecast by 12 percent to 475 billion yen.

Pachinko is a vertical form of pinball while pachislot is a high-tech variation of a slot machine. The two, a form of legal gambling, are part of one of Japan's largest industries with annual revenues of some 30 trillion yen.

The pachinko market has been hit by tighter regulations on the industry, while the outlook for the game arcade market has been dented by the soaring popularity of Nintendo Co Ltd's (7974.OS: Quote, Profile, Research) Wii game console that users play at home.

Sega Sammy predicted its pachinko machine segment would see operating profit fall 85 percent to 11 billion yen, and forecast its arcade division to post a loss of 11.4 billion yen, against a 132 million yen profit in the prior business year.

The net loss forecast reflects the pushing back of planned sales of real estate to the next business year and retirement benefits to the 400 employees being cut at Sega, equivalent to about 5 percent of its group workforce.

Sega Sammy said it plans to close Sega Amusements Singapore Pte Ltd and restructure globally in order to deal with its poor performance of game machines for arcades overseas.

In November, it announced a plan to close or sell 80 of its 430 arcades by March.

Prior to the announcement, shares of Sega Sammy ended at 1,100 yen, down 5.9 percent, reaching its lowest closing price since the company was formed in October 2004 after the merger of Sega and Sammy. The shares underperformed against benchmark Topix 's 1.4 percent fall. (Reporting by Yoko Kubota; Editing by Anshuman Daga)