Hope Fading at Atari

Bad times got worse at Atari as the company posted a loss and a 35% decline in sales in the important holiday quarter.

The struggling video game publisher also announced that CFO Diane Baker has resigned, effective immediately, to "pursue a new opportunity."

And if that wasn't enough, the company said that HSBC, a bank that has provided it with working capital, has cut off the company's credit line. Atari warned last month that its holiday quarter results didn't meet the strictures the bank put on the company last year.

"The uncertainties caused by these conditions raise substantial doubt about [Atari's] ability to continue as a going concern," the company said in a statement.

Investors reacted accordingly, dumping the stock in after-hours exchanges. In recent trading, shares of Atari were off 32 cents, or 36%, to 56 cents.

Certainly, the company's results in its fiscal third quarter didn't give investors any solace. Video-game providers typically see the bulk of their sales in the holiday quarter. And profit in the quarter usually make up for losses in other periods.

That won't happen for Atari this fiscal year. Instead of a profit, the company lost $4.8 million, or 4 cents a share, in the just-completed period. In contrast, the company earned $19.6 million, or 16 cents a share, in the year ago period.

Sales fell year over year to $100.8 million from $156.4 million a year earlier.

Excluding restructuring charges and costs related to discontinued operations, the company would have lost $3.4 million or 2 cents a share.

On average, the three analysts polled by Thomson First Call were expecting the company to earn 17 cents a share in the just-completed quarter on $146.8 million in sales. The company did not previously provide a forecast for the period.

Atari did not immediately provide its outlook for its fiscal fourth quarter.

Analysts had predicted the company would lose 3 cents a share in the current period on sales of $83.1 million. In the same period a year ago, the company lost $9.1 million, or 7 cents a share, on $62.7 million in sales.

Shares of Atari closed regular trading on Thursday unchanged at 88 cents a share.