TOKYO--Sammy and Sega announced that the two developers are aiming to raise company profits by 40 percent in the next three years. The two companies will be merging at the beginning of next month under a new holding company, Sega Sammy Holdings. The $1.4 billion merger is expected to make Sega and Sammy one of the largest game and Pachinko pinball makers in Japan.

　　Sega Sammy Holdings for the fiscal year ending March 2007 will aim for a group net profit of 68 billion yen ($620 million) and sales of 625 billion yen ($5.69 billion). That's a 40 percent leap from the current fiscal year's estimated combined net profit of 47.5 billion yen ($433 million), and a 20 percent leap from the expected combined sales of 520 billion yen ($4.73 billion).

　　The 47.5 billion yen of net profit expected for the current fiscal year is an updated figure announced by Sega and Sammy yesterday. It's actually 5.5 billion yen lower than the previously estimated figure of 53 billion yen ($483 million), but the companies explain that the forecast revision is based on offsets between the two company's transactions rather than on losses from business. The new figure will still be higher than the two company's profits from last year, which was 41 billion yen ($374 million) combined.

　　According to Bloomberg Japan, Sega and Sammy hope to become one of the top five game makers in the industry, but about three quarters of the operation's profits are slated to be earned by the Pachinko business side.

　　Sega Sammy Holdings, which will manage the two companies, will consist of 50 employees: 30 from Sammy and 20 from Sega. Regarding thoughts of any game developers departing from Sega, Sammy chairman Hajime Satomi commented, "I thought it was probable, but it hasn¹t happened at all yet. We¹re very much being welcomed."

　　Seeing that a strong presence in the game space is essential for its international standing, and that the current number of R&D staff may not be enough to fuel the targeted growth (there are 400 developers in Japan and 200 overseas), Sega and Sammy are planning to increase the number of developers mainly though mergers and acquisitions of game studios in Europe, the company said.