What's Happening in the Atari World
By Stephen Mortimer
START Contributing Editor
Atari First-Quarter Earnings
Atari's first-quarter earnings for 1989 revealed both good and bad
news for the company. Sales were down to $88.8 million in 1989, compared
to $98.3 million in the first quarter of 1988, a decrease of 10 percent.
Operating income was $6.2 million, compared to $15.3 million last year-a
60 percent decrease. Net income in 1989 decreased 42 percent, falling to
$3.3 million (6 cents per share) from $5.7 million (10 cents per share)
in 1988.
The 1988 earnings reflected the losses from Federated operations. Since Federated is now considered a discontinued operation, its losses will no longer affect corporate earnings.
Gregory Pratt, Atari's vice president of finance and chief financial officer, cited the lower earnings as a result of a 40 percent decline in the video games business. Additionally, the dollar rose 10 percent in value, causing lower profit margins for Atari since its products are made in Taiwan. The good news was a growth of 15 to 20 percent in the computer business. The number of units shipped this year increased significantly over last year.
Stephen Mortimer is a contributing editor for START He lives in
Binghamton, New York.
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
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| (in thousands, except per share data) |
|
|
|
1989 |
1988 |
|
| NET SALES |
$ 88,776
|
$ 98.321
|
| Operating Income |
6,169
|
15,271
|
| Income from continuing operations before income tax |
3,411
|
16,202
|
| Provision for income taxes (Note 1) |
123
|
1,128
|
| Income from continuing operations |
3,288
|
15,074
|
| Discontinued Operations (Note 2) |
--
|
(9,400)
|
| NET INCOME |
$ 3,288
|
$ 5,674
|
| EARNINGS PER COMMON AND EQUIVALENT SHARE: |
$ 0.06
|
$ 0.26
|
| Net lncome |
$ 0.06
|
$ 0.10
|
| Number of shares used in computation |
57,781
|
57,951
|
| NOTES
(1) The tax provision for the continuing operations of Atari has been reduced by approximately $1.3 million in respect of the benefit of the losses of discontinued operations for the quarter. (2) Represents operations of the Federated Group. In March 1989, the Company decided to discontinue its operation of Federated and reflected this decision in 1988 by writing off its remaining investment in Federated and providing for anticipated financial obligations and losses arising from this investment. The Company is pursuing various options and intends to complete this disposition in 1989. |
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