Atari Q3 profits sink, two studios shuttered

The hatchet came down fast and furious today as Atari took some drastic steps to turn its fortunes around.

First, the company reported financials for the quarter ending Dec. 31, 2004. For the company's third quarter of its 2005 fiscal year, it earned $161.8 million, compared with $190.6 million for the same quarter a year earlier. Net income, or profit, for the quarter was $19.6 million, versus $23.0 million the previous year. Atari called out top sellers Atari Anthology (PlayStation 2, Xbox), Dragon Ball Z: Budokai 3 (PS2), Sid Meier's Pirates! (PC), RollerCoaster Tycoon 3 (PC), and the Atari Flashback Classic Game Console as its main revenue generators.

But possibly the bigger news was the company's decision to close both its Santa Monica, California, and Beverly, Massachusetts, operations. In an e-mail sent to employees shortly before today's earnings call with analysts, new Atari CEO and president Jim Capparro outlined his plan to "move Marketing and the coordination of Product Development and Production to New York, where those functions will be in close proximity to our center of operations."

The e-mail went on to say that the decision to close the two studios "was not made easily." It continued, "We are all ever-mindful when good people and jobs are at stake... But in an increasingly competitive environment, there are times when tough--and unpleasant--choices have to be made. This is such a moment."

GameSpot spoke with staffers in the Santa Monica offices today who confirmed their pending departure and directed further questions to Atari's New York offices.

In a statement released prior to the call, Caparro said, "Leading Atari's structural changes and driving its new strategic mandate will be a complete transformation of the senior management team and a realignment of responsibilities in order to bring greater focus and establish stricter procedures and practices throughout all of the Company's operations."

Looking ahead, the company expects "to report a net loss in the range of break-even to $10 million" for the current quarter.

After fielding numerous questions from analysts during the teleconference, Caparro closed the call with a plea for analysts to look as optimistically at Atari's future as its senior executives do. "I do understand, completely, where all the interest lies," Caparro said. "Most importantly, I would hope that everyone takes away from this [call] that we do have a very grounded view of the challenges that we have, but we have a plan in place to capitalize on the opportunities that exist, and we are going to be fanatically aggressive in looking to capitalize and position the Company so that it does add significant value going forward to everybody. So, bear with us a little bit and…as time goes on…recognize that what we say, we'll do, and we'll deliver results beyond expectations."