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Atari Future Uncertain As Q2 Losses Increase

Atari has opening expressed growing doubt as to whether it can continue its operations and is looking into further layoffs and project cancellations, as its Q2 results see losses hit $7.7 million, and sales down nearly $15 million over the year prior.
Following its move to exit development and the departure of its former CEO, publisher Atari has announced its second quarter results, showing sales down to $13.3 million, and net losses of $7.7 million, significantly higher than the prior year's $68,000. Sales were down from $28.6 million in 2006. Revenue from publishing was also down from $23.1 million to $11.4 million, and its distribution revenue fell from $5.5 million to $1.9 million. For its half year, Atari saw sales fall from $48.1 million in 2006 to $23.7 million, and net losses mounting from $7.4 million last year to $19.6 million. In Atari's quarterly report filing with the SEC, the company openly raises doubts about its ability to continue functioning, even with the sale of its development rights to Infogrames. "Historically, we have relied on IESA [Infogrames] to provide limited financial support to us, through loans or, in recent years, through purchases of assets," the filing reads. "However, IESA has its own financial needs, and its ability to fund its subsidiaries’ operations, including ours, is limited. Therefore, there can be no assurance we will ultimately receive any funding from IESA." "The uncertainty caused by these above conditions raises substantial doubt about our ability to continue as a going concern," it continues. Atari says it is exploring "various alternatives to improve our financial position and secure other sources of financing" and adds that in the near-term, the company could see "additional personnel reductions and suspension of certain development projects during fiscal 2008." Looking forward, the company says that it has been working through a strategy to "replace part of the revenues we lost in recent years by expanding into... casual games, on-line sites, and digital downloading." It also says that as "the Atari name has been an important part of our branding strategy" providing it with "an important competitive advantage", it is looking into licensing the name itself "for use in products other than video games." But, it notes "our ability to do at least some of those things will require expansion and extension of our rights to use and sublicense others to use the Atari name," and it currently has no agreements that it will be allowed to do so.

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