Sega expects to post a 7.1 billion yen (approximately $85 million) loss for the year ending March 2012, and has announced it will be streamlining its business and canceling unspecified games as a result. The company says that the "challenging economic climate" necessitates a structure shift, including more digital content development. We don't know which games are on the chopping block, but we know a few that aren't.
The company says that IPs like Sonic the Hedgehog, Football Manager, Total War, and Aliens are expected to perform strongly, and indicated no plans to cancel those games. Other unspecified games are being canceled, but those could be projects that haven't been publicly announced yet.
Sega didn't give indication of how this might impact its studio structure or if layoffs are expected. Presumably, the renewed focus on digital games means we'll see more output to download services like PlayStation Network and Xbox Live Arcade, along with more games in the mobile market. Shacknews has contacted Sega regarding the game cancellations, and will update as more information becomes available.