Microsoft, Japanese firm discuss venture

TOKYO — TOKYO -- Japanese software maker Softbank Corp. said it is discussing a joint venture with Microsoft Corp., confirming part of a report that sent shares in Nintendo Corp. and Sega Enterprises Ltd. plunging to their lowest levels in years.

Softbank issued a statement after a report in the Nihon Keizai newspaper that it will join the world's largest software maker in a $12 million venture to develop video games for home computers.


The report sent shares in Japanese video-game makers Nintendo and Sega plunging on concerns that a shift to computer games would cut away the companies' markets for custom video-game players.

"The market sees it as a powerful alliance that could hurt Nintendo and Sega," said Dan O'Keefe, equity analyst at Merrill Lynch Japan.


Sega's shares fell to their lowest level in five years at one point before rebounding to close at 2,840 yen, down 140 yen. Nintendo fell 190 yen to 4,590, a 10-year low.

Trading of Softbank shares was suspended all day after the reports.

Softbank's statement, issued after the stock market closed, said the company is in talks with Microsoft and sees a joint venture as "one possibility."

The newspaper said Redmond, Wash.-based Microsoft will provide more than half of the 1 billion yen ($11.9 million) capital for the new company, which will tentatively be called "Gamebank."

The games would run on Windows 95, the long-awaited next-generation operating system that Microsoft is to start marketing later this year, the report said.