Atari Q2 losses widen on 'uncertainty'
[UPDATE] Publisher announces revenues down across the board, admits that it has "substantial doubt" about its ability to carry on.
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Last week Atari CEO David Pierce resigned after just over a year on the job, with his post being temporarily filled by the company's chief restructuring officer Curtis G. Solsvig III. The resignation came the week after the company announced its long-delayed financial results for its first fiscal quarter, which ended June 30, 2007. Those figures painted a bleak picture of the once-iconic publisher's future.
The company also announced its plans in North America to withdraw from the production business, and its plans to license the Test Drive series to parent company Infogrames in exchange for a $5 million advance on royalties. The statement from Atari also indicated that it has "regained compliance with Nasdaq's periodic reporting requirements."
Today the second-quarter results for Atari are in, showing that net revenue for the period between July 30 and September 30 was $13.3 million compared to $28.6 million in the same period last year. Publishing net revenue was $11.4 million, versus $23.1 million last year, and distribution revenue was $1.9 million compared to $5.5 million the prior year. The net loss for the second quarter was $7.7 million, or 57 cents a share.
[UPDATE] As if the faltering numbers were not bad enough, Atari has admitted in a SEC filing that its road ahead is less than certain. The report explains that although the company has relied on Infogrames for loans and purchases of assets, the parent company has its own financial needs, and as a result may be unable to continue to help.
Atari has also sold off development studios including Shiny and Reflections, along with the rights to the Driver series and other IP. This reduction in development has led to fewer games being published.
The filing reads, "The uncertainty caused by these above conditions raises substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty."
The report reiterates that the company is continuing to explore options to improve its financial position and secure other sources of funding. The statement reads, "We continue to examine the reduction of working capital requirements to further conserve cash and may need to take additional actions in the near-term, which may include additional personnel reductions and suspension of certain development projects during fiscal 2008."