TOKYO (Reuters) – Japanese game maker Sega Enterprises Ltd. slashed its annual profit forecast Friday due to problems with accumulated supplies of outdated game players and losses at its U.S. subsidiary.

Sega said it would swallow a substantial special loss in the current business year, which ends in March, to tackle the woes at U.S. unit Sega of America and to dispose of worldwide inventories of old-style 16-bit game players.

As a result of the anticipated 23 billion yen ($200 million) special loss, the firm cut its forecast for net parent profits for 1996-97 by around two-thirds to 5.31 billion yen ($46.1 million) from a November forecast of 16 billion yen ($139 million).

It also cut its forecast for group profit in the same period by almost half, to $46 million from the previously forecast $86.9 million.

The focus of the home videogame market is rapidly shifting from 16-bit players to the new-generation 32-bit machines. Industry analysts said Sega has had a setback due to offensives by rival Sony’s 32-bit PlayStation and Nintendo’s cutting-edge 64-bit game player Nintendo 64.

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