Atari in delisting danger once again

Publisher's market value dips below Nasdaq minimum level; stock exchange gives company 90 days to regain compliance.

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Although the New Year is often seen as a time to turn over a new leaf, Atari finds itself facing a very familiar problem. The Nasdaq Stock Exchange warned the publisher late last month that it was in danger of being dropped from the exchange.

Atari began 2007 under a similar threat of delisting because for much of 2006, the company's share price resided below the exchange's minimum of $1 per share. The publisher's answer to the problem was a reverse stock split; Atari reduced its total number of shares to one-tenth the previous number, which effectively made every remaining share worth 10 times as much.

The move buoyed the company's stock well above the $1 mark and kept it on the stock exchange, at least for a while. The latest warning, announced by the publisher on December 27, will take more than a reverse stock split to fix. The publisher is in violation of the Nasdaq's minimum market-value requirements, which means that the sum of its publicly held shares (all shares minus those owned by executives and owners of 10 percent or more) was less than $15 million for 30 straight days.

Now Atari must bring its market value above the $15 million mark and hold it there for 10 consecutive days by March 20 or face delisting from the Nasdaq. If the stock exchange does decide to drop the publisher at that time, Atari may appeal the ruling.

Despite last month's settlement of a licensing dispute that could have cost it the lucrative Dragon Ball Z license, Atari's fortunes have been generally down as of late. The publisher has withdrawn from its North American development business, its CEO of less than a year resigned in November, and it warned investors in a Securities and Exchange Commission filing that there was "substantial doubt about our ability to continue as a going concern."

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