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Atari Posts Depressed Quarterly Fiscal Results, Warns On Future

Atari has released its financial results for the third quarter and first nine months of its 2006 fiscal year, a period ending December 31, 2005. The company posted signif...
Atari has released its financial results for the third quarter and first nine months of its 2006 fiscal year, a period ending December 31, 2005. The company posted significantly less revenue, earning only $100.8 million, a 36% decrease of its Q3 2005 revenue of $156.4. Due to the lower income, Atari posted a net loss of $4.8 million, compared to its net income of $19.6 million in Q3 2005. The reason cited for the losses was a lower amount of games released during the holiday period, rather than the console transition effects that most other publishers felt. What revenue Atari did have was due to its Dragon Ball Z franchise games for PlayStation 2 and Nintendo DS, as well as The Matrix: Path of Neo for multiple platforms and the Atari Flashback 2 TV game, but it seems clear that Path Of Neo hasn't reached the lofty heights of the previous Matrix title in terms of sales. Nine-month results were also low, with $163.4 million in earnings compared to $332.5 million in 2005, and a net loss of $62.8 million rather than the $14.8 million in net income during the comparable period in 2005. As a result of its situation, the company has defaulted on its loans from HSBC Business Credit, which is currently denying Atari further credit. HSBC said that it may advance Atari more capital after review a revised business plan, but the company admits that should this funding be denied, the future of the company is in jeopardy. "With the new console cycle now underway, new technologies bring with it new challenges," said Atari chairman, CEO, and Chief Creative Officer Bruno Bonnell. "As we anticipated, during the holiday season the industry felt a depressed demand for current generation titles at retail and, as a result, publishers will need to strategically address the marketplace, balancing titles across multiple consoles, as well as portable devices." Still scheduled for release in the 2006 financial year, before March 31st, are Desperados 2: Cooper's Revenge (PC), Dragon Ball Z: Shin Budokai (PSP), Driver: Parallel Lines (PS2 and Xbox), Dungeons & Dragons Online (PC), Kao the Kangaroo Round 2 (PS2, Xbox, GC and PC), Kao Challengers (PSP), Marc Ecko's Getting Up: Contents Under Pressure (PS2, Xbox and PC) and Tycoon City: New York (PC). Atari also announced titles planned for 2007, including a number of previously unrevealed names and franchise extensions, such as Alone in the Dark: Near Death Investigation (Xbox 360 and PC), Battlezone (PSP), Neverwinter Nights 2 (PC), Stuntman 2 (Xbox 360), Test Drive Unlimited (Xbox 360, PC), TimeShift (Xbox 360 and PC), and others. Overall, though Atari and parent Infogrames are still operating, the company commented that: "The uncertainties caused by these conditions raise substantial doubt about the Company's ability to continue as a going concern", and noted that it "is currently exploring the replacement of its credit facility, potential licensing or sale of selected intellectual property rights and the sale or closure of development studios [as well as] potential personnel reductions and the suspension of certain development projects." Atari shares, already down to 88c in regular trading, were off another 25c to 63c in after-hours trading.

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