Desperate Atari considers lay-offs, suspension of projects

Troubled publisher Atari US has expressed doubts about its ability to continue as a going concern, revealing it is considering radical measures to keep the company afloat.

With the company unlikely to receive funding from parent Infogrames, it is considering suspending current development projects, laying off more staff and selling its remaining intellectual property.

"Historically, we have relied on Infogrames Entertainment SA (IESA) to provide limited financial support to us, through loans or, in recent years, through purchases of assets," said the company in an SEC filing.

"However, IESA has its own financial needs, and its ability to fund its subsidiariesâ operations, including ours, is limited. Therefore, there can be no assurance we will ultimately receive any funding from IESA. The uncertainty caused by these above conditions raises substantial doubt about our ability to continue as a going concern," detailed Atari US.

Yesterday, the publisher revealed a second quarter net loss of USD 7.7 million, with net revenue down from USD 28.6 million to USD 13.3 million.

"We continue to explore various alternatives to improve our financial position and secure other sources of financing which could include raising equity, forming both operational and financial strategic partnerships, entering into new arrangements to license intellectual property, and selling, licensing or sub-licensing selected owned intellectual property and licensed rights," said the publisher.

Last year Atari sold its Driver franchise and development studio Reflections to Ubisoft, and The Matrix studio Shiny Entertainment to US outfit Foundation 9.

Last week, Atari ended a production agreement with majority shareholder Infogrames, deciding instead to concentrate on publishing and distribution in the US.

However, the company has stated that further action may be necessary, including axing jobs and stopping work on games already in development.

"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."

Despite considering these measures, and focusing on new business opportunities in online and casual gaming, the publisher said it could offer no guarantee that these measures would help in the long term.

"The above actions may or may not prove to be consistent with our long-term strategic objectives, which have been shifted in the last fiscal year.

"We cannot guarantee the completion of these actions or that such actions will generate sufficient resources to fully address the uncertainties of our financial position."

Atari has a number of projects in development, including Alone in the Dark (pictured), which was recently announced would be released on PS2 and Wii as well as Xbox 360, PC and PlayStation 3.