The firm of Nikko Solomon Smith Barney has issued a new bullish report on Sega Enterprises. The firm is very optimistic on the Dreamcast network, and use this to justify their new price target of 6,000 yen for Sega's stock. But inside the report were some other nuggets of information. Here are a few of the highlights:

Total shipments to North America as of early December were 1.85 million units and 800,000 to Europe. Total sell through numbers by year-end were probably 1.6 million in the US and about 625,000 in Europe. This was less than Sega could have achieved, as there are some bottlenecks in getting some components for the GD ROM unit. Sega currently can produce about 350,000 units per month compared to the goal of 500,000 per month. But Sega is moving to a second source for certain parts in April and believes that monthly production can move up to 1 million units by June. Sega believes that it can reach sales to match this production level despite the launch of the PS2 due to what it expects to be the wide price differential between the two machines. Also, Sega does not expect the Dolphin to ship in 2000.

Having said this on the production levels, it is still estimated that Sega is losing about 2,000 yen per machine sold, despite the cost to produce the DC falling by about 20% since the Japanese launch. However, there is a new lower-cost Dreamcast version that is slated to launch in June that will enable the Company to at least break even on production costs.

Sega will start to spin off parts of its development divisions starting in February and have a total of 11 or 12 separate subsidiaries by June. It appears that Sega is giving the go ahead for these new companies to be open platform. They intend to focus more on PC games than Sega has in the past. Also, and quite interesting, is that it seems that they will be developing games for competitors' platforms (PS2, Dolphin?) but NSSB says only when fully warranted. The focus will be on profitability, and this will be the main factor when choosing to develop for a specific platform.

So far about 30% of DC user in Japan and Europe are on the network while 20% are hooked up in the US. However, so far this is not very profitable with the exception of the 25% of US users that are on ATT. Almost all the content that Sega is developing in Japan is network enabled and the sports titles being developed in the US such as NFL 2001 are planning to use the network. Sega hopes to be one of the leading online service providers through the Dreamcast. However, over the long term Sega plans to open its network to other terminal devices and is studying the possibility of making it accessible to PCs in as early as the second half of 2001.