Capcom's board of directors have decided yesterday they will be officially dissolving Clover Studios, makers of the recently released Okami for the PlayStation 2.

Originally established in 2004 Clover was also known for the Viewtiful Joe games and the somewhat tongue-in-cheek brawler God Hand. Some of the more familiar names they employed included Atsushi Inaba (producer of Steel Battalion and Viewtiful Joe), Shinji Mikami (Resident Evil creator), and Hideki Kamiya (Devil May Cry director).

The announcement was a shock to many. The reason for the closure was as follows: "Clover Studio Co., Ltd. has met the goal of developing unique and creative original home video game software, however, in view of promoting a business strategy that concentrates management resources on a selected business to enhance the efficiency of the development power of the entire Capcom group, the dissolution of Clover Studios Co., Ltd. has been raised and passed at a Board of Directors' meeting." The company will be officially dissolved at the end of March 2007.

Also during this was an announcement of revision of earnings and dividend forecast. While there was steady growth in the sales of Dead Rising for the XBox 360 other games such as the MegaMan Battle Chip arcade game haven't performed well.

The closure of Clover Studios comes just as capcom had pulled themselves out of spiraling losses. In 2003 Capcom had losses of $163 million and had to shelve 18 projects. Things are looking better now as they have made a profit of $7.02 million during this year's first quarter.

At the end of the press release was added "The impact of the dissolution of Clover Studio Co., Ltd. on the financial forecasts, separately announced on the same day, is inclusive as part of Extraordinary Losses amounting to 400 million yen," or approximately $3.5 million.

Earlier in the year Capcom also closed Studio 8, the developers responsible for the Maximo games as well as their Capcom Eurosoft distribution arm.