Atari's Q3 revs sink more than a third

Publisher cites weak holiday season, game delays for financial woes; says 2007 is a year "of focus," more portable titles such as Battlezone for the PSP.

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The good news for Atari is its Q3 report for fiscal year 2006 is better than its Q1 and Q2 reports for the same year. The bad news for the France-based company is that the first half of its business year was so bad that it really couldn't get much worse.

The game publisher announced its Q3 earnings today, and net revenues were down more than one-third. For the quarter ending December 31, 2005, revenue was $100.8 million, compared to $156.4 million in the same period in 2004. Net loss for the period totaled $4.8 million, well down from the net income of $19.6 million earned in Q3 2004.

However, given the grim reports for the previous two quarters, Q3 was almost a ray of sunshine. Revenue for the nine-month period ending December 31, 2005, was $163.4 million. For the same period in 2004, revenue was more than double that figure, at $332.5 million. Whereas last year's take was $14.8 million for the first three quarters of the year in 2004, 2005's first nine months saw an unsightly $62.8 million in losses.

The bright spots for the company were Dragon Ball Z: Budokai Tenkaichi for the PlayStation 2, Dragon Ball Z: Super Sonic Warriors 2 for the Nintendo DS, The Matrix: Path of Neo for the Xbox, PS2, and PC, and the plug-and-play console Atari Flashback 2. However, the retail successes of said games were not enough to counter an exceptionally slow holiday season and game delays, most notably the postponement of the multiplatform Mark Ecko's Getting Up: Contents Under Pressure.

Atari also announced today that executive vice president and CFO Diane Baker has resigned from her position "to pursue a new opportunity." The company has not named an immediate replacement.

Looking toward 2007, CEO Bruno Bonnell clearly laid out Atari's plans. In a question-and-answer session with analysts after the numbers were laid out, he said, "We will focus our efforts on capitalizing on established franchises... And we will look to grow our market shares on portable devices such as Nintendo DS and Sony PSP."

Atari revealed some new games, set for release sometime in the company's next fiscal year, which will spearhead Bonnell's strategy. The company confirmed that the next edition of Stuntman, a racing simulation in which players relive the exploits of Hollywood's daredevils, will be released on the Xbox 360. The Alone in the Dark franchise has a new subtitle, Near Death Investigation, and a new platform, the PC. Heading its attack on the PSP is the newly announced Battlezone, a license that Atari has had from its days as a coin-op arcade giant. Not going into specifics and surprising no one, the company also revealed that it will release more "titles from the Dragon Ball Z franchise."

The market's response reflected the disappointing news. Atari opened the day at $.91 per share, but dropped to $.60 per share in after-hours trading.

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