The console maker blames sluggish Dreamcast sales in the United States and Europe on the lack of new game titles. The device debuted last September in the United States and November in Europe.
Sega declined to disclose specific revenue figures. Sales in Japan are in line with the company's plans, a spokesman said.
Sega was counting on the Dreamcast's popularity abroad to help return to profit after three straight years of losses. In the year that ended March 31, 2000, the company had a net loss of $395 million. In May, Sega predicted that it will post a net profit of $13.8 million (1.5 billion yen) in the year that ends March 31, 2001.
"Dreamcast needs a strategy change," said Takashi Oya, an analyst with Deutsche Securities. ''Sega needs to give up competing with Dreamcast rivals and has to think about scaling back Dreamcast operations without incurring losses."
Sega shares have lost 60 percent of their value so far this year.
The Tokyo-based company hopes to sell 2.5 million Dreamcast boxes in the United States and another 1.2 million in Europe in the year to March 2001. The company expects to sell 1 million units in Japan in the same period.
It is "difficult'' to maintain last year's pace of Dreamcast sales in overseas markets, Sega spokesman Munehiro Umemura said. "The pace is now slowing down."
Even so, the company has no immediate plans to cut Dreamcast sales targets for the year ending March 31, 2001. It expects to boost console sales on the release of game software titles, such as Phantasy Star Online, before the Christmas shopping season in the United States.
Sega last year sold 4.65 million Dreamcast units worldwide, falling short of its 4.9 million unit target announced in November. In Japan, Sega sold 950,000 Dreamcast units last year, missing its target of 1.1 million.
Shipments of Sony's PlayStation, which debuted in December 1994, total more than 73.5 million units. The Tokyo-based company has sold 3 million PlayStation2 consoles since the machine's Japanese debut in March.
Sony hopes to sell an additional 8 million units of the original PlayStation and of a redesigned model this year. The consumer electronics maker wants to sell 10 million PlayStation2 units in the year that ends March 31, 2001. The PlayStation2 will make its U.S. debut in October, followed by a November release in Europe.
Copyright 2000, Bloomberg L.P. All rights reserved.