News, Notes & Quotes
What's Happening in the Atari World
by Stephen Mortimer
START Contributing Editor
Atari Discards Federated, Posts Overall Loss in 1988
On March 8, 1989 Atari Corp. announced that it had discontinued operations of the Federated Group, the retail electronics chain purchased by Atari in 1987. Federated had not been profitable for more than a year despite stringent cost-cutting measures carried out by Atari. Federated stores are continuing normal operations.
For 1988, Atari took a $124 million write-off because of the planned phaseout of Federated. Reserves have been established, however, so that Federated will no longer affect Atari's balance sheets negatively. Counting only Atari's continuing operations, net sales for the year were $452.2 million compared to $362.6 million in 1987. Net income was $39.4 million, or $.68 per share, compared to $46.6 million, or $.80 per share, in 1987. Net sales for the fourth quarter of 1988 were $152.6 million compared to $146.4 million with net income for the quarter at $9.3 million ($.16 per share), compared to $21.2 million ($.36 per share) in 1987.
If the losses incurred by Federated are included in earnings, Atari lost $84 million in 1988. The majority of the write-off was against fourth-quarter earnings resulting in an overall net loss of $97 million for the quarter.
The Atari brass are currently considering various options with respect to Federated. Atari has received several inquiries from parties interested in purchasing Federated Group. Atari's lawsuit arising from its purchase of Federated will not be affected by a sale or the discontinuance of operations. Atari is seeking damages based on charges that Atari was led to pay more for Federated than it was worth.
Despite higher gross sales for the year, the DRAM shortage and high prices for those chips that were available also affected Atari's 1988 net income adversely. Atari says that the shortage peaked early in the fourth quarter of 1988 and now poses no problem to the company. Greg Pratt, Chief Financial Officer of Atari, stated that the financial health of the company is "exceedingly strong." He cited that Atari's total cash on hand was almost equal to its total debt ($91.9 million in cash, $93.5 million in debt). After the write-offs and reserve, Atari's net worth was $83.2 million as of the end of 1988. The scheduled introduction of the new ST, MS-DOS, and UNIX models and an improving business environment point toward a banner year for Atari.
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Atari Marketing Materializes
As promised, Atari is dramatically expanding its marketing efforts in the United States. In February, television and print advertising began in major markets across the country. The $3,995 PostScript-compatible DTP system spearheaded the promotion. The SLM804-PCV (an SLM804 with UltraScript bundled) is $1,495, $1,295 for the laser printer alone. Special 1040ST deals promoted the purchase of color systems for $999 and monochrome systems for $799, the lowest price yet for a one-megabyte Atari. Although most of these specials ended March 31, Atari seems committed to moving products out the door and into buyers' hands. Mike Dendo, Vice President of Sales at Atari Computer, hopes to begin attacking smaller markets this summer. Dendo says that Atari is "staying on course" and that by the end of 1989, Atari will hopefully be a major player in the U.S. marketplace.
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Atari Folio Tours Europe
The Atari Folio, an MS-DOS compatible pocket computer, was introduced in February at London's "Which Computer?" Show. First previewed for START readers in our January 1989 European Report, the Folio was designed by DIP of Guildford, U.K., and is now made by Atari in Japan. The eight-by-four-inch computer weighs in at less than a pound and is powered by two AA batteries. It uses an 80C88 processor and a 40-character-by-eight-line LCD screen. Memory configurations allow up to 256K RAM. The operating system and several pieces of software are in ROM, including a Lotus-compatible spreadsheet, address book and text processor. "Smart" cables will allow the Folio to interface with both PCs and STs.
ROM cards that contain applications and RAM cards to take the place of floppy disks will also be available. Atari has exclusive marketing rights to the $349 Folio. It has been shown at a number of shows throughout Europe to enthusiastic crowds.
Hannover a Hit!
The Cebit show held in Hannover, West Germany, was an important springboard for new products from Atari. The Stacy laptop ST was demonstrated in near final form in its sleek, gray plastic case. Weighing in at under 14 pounds with a battery that reportedly lasts four hours, the Stacy will be available in June or July of this year. A system with one megabyte of RAM and a double-sided floppy drive will list at $1,495. A second floppy drive or hard disk is optional.
Another product shown was the Megafile 44, a removable media harddisk drive Based on Syquest technology, each cartridge can hold 44 megabytes of data. The drive also has room for an optional 3.5-inch fixed hard disk in its Mega-style stackable case. It will retail for $1,195 and each cartridge will be $150.
Atari also displayed the PC4 MS-DOS compatible computer, an 80286-based system with integrated IBM VGA graphics. Microsoft Windows is also included in the $1995 system.
The Mega 1 computer, a one-megabyte RAM computer in a Mega case is now shipping in Europe. The Atari Transputer Workstation (ATW) was shown again in Hannover and is about to be released in Europe. When (or if) these two machines will be released in the United States is unknown. Rumors circulating at Hannover (and later confirmed by Atari President Sam Tramiel in an "Ides of March" online conference on GEnie), pointed to a super game machine coming from Atari in 1990, possibly the ST-based game machine.
The 68030-based TT was reportedly shown behind closed doors in Hannover. Sam Tramiel describes the TT as "late, but great. . .it will offer better resolution, and raw horsepower. The machine will run TOS, and therefore most [ST] programs will run on it right out of the box. It can also run UNIX(tm) 5.3.1." Atari employees indicated that Dungeon Master works on the TT as does CAD-3D, "amazingly fast." Tramiel expects the TT to be released in August or September of this year.
Stephen Mortimer is a contributing editor for START and lives in Binghampton, New York.
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