Sega earned $8.3 million (1.01 billion yen) in the six months through September in contrast to a loss of 20.87 billion yen in the first half a year ago.

Sales totaled $777 million (95.1 billion yen), down nearly 3 percent from 97.8 billion yen a year ago. Sales dropped 36 percent overseas, although sales in Japan edged up 6 percent.

Worries are growing about a slowdown in U.S. consumption in the months ahead. Adding to Sega's woes is the deflationary trend in Japan that is continuing to push down game prices.

Sega had decided to compete head-on against Electronic Arts in the huge U.S. sports software market, but it has failed to acquire the market share it had hoped for.

Sega's U.S. sport game unit may stop making games for GameCube to become more cost-effective although the decision would not be made until next month, Kayama said.

"We will change the cost structure at our consumer division so that it can break even if we only sell 11 million games next year," he said.

Sega sold 810,000 games in Japan, falling short of the 1.14 million it had hoped to sell. U.S. sales totaled 2.56 million games, below its target of 3.6 million.

Sales in the arcade-game division were up 17 percent, thanks to the popularity of games in Japan using trading cards. Sales of consumer games were down 19 percent as online and sports games failed to sell as briskly as the company had hoped.

For the full year ending in March 2003, Sega expects to earn $41 million on $1.6 billion in sales.