|Fate||Closed, properties sold|
JTS Corporation (1996-1998)|
Atari Interactive (division of Hasbro Interactive) (1998-2001)
|Founded||July 1, 1984(as Tramel Technology, Ltd.)|
Jack Tramiel (Founder and CEO)|
Sam Tramiel (President)
Atari ST |
Atari Corporation was an American manufacturer of computers and video game consoles from 1984 to 1996. Atari Corp. was founded in July 1984 when Warner Communications sold the home computing and game console divisions of Atari, Inc. to Jack Tramiel. Its chief products were the Atari ST, Atari XE, Atari 7800, Atari Lynx, and Atari Jaguar. The company reverse merged with JTS Inc. in 1996, becoming a small division, which itself closed when JTS liquidated the IP to Hasbro Interactive in 1998.
The company was founded by Commodore International's founder Jack Tramiel soon after his resignation from Commodore in January 1984. Initially named Tramel Technology, Ltd. (TTL), the company's goal was to design and sell a next-generation home computer. On July 1, 1984, TTL bought the Consumer Division assets of Atari, Inc. from its owner Warner Communications, and TTL was renamed Atari Corporation. Warner sold the division for $240 million in stocks under the new company.
In order to halt the massive losses Atari, Inc. had been yielding under Warner's ownership, Tramiel shut down nearly all of their 80 domestic branches, laying off the staff and liquidating the inventory. Under Tramiel's ownership, Atari Corp. used the remaining stock of game console inventory to keep the company afloat while they finished development of their 16-bit computer system, the Atari ST. In 1985, they released their update to the 8-bit computer line--the Atari XE series--as well as the 16-bit Atari ST line. Then in 1986, Atari Corp. launched two consoles designed under the Warner Atari: Atari 2600 Jr and Atari 7800 (which had a limited release in 1984). Atari Corp. rebounded, producing a $25 million profit for 1986. The Atari ST line proved very successful (mostly in Europe, not the U.S.), ultimately selling more than 5 million units. Its built-in MIDI ports made it especially popular among musicians. Still, its closest competitor in the marketplace, the Commodore Amiga, outsold it 3 to 2. Atari eventually released a line of inexpensive IBM PC compatibles as well as an MS-DOS compatible palm computer called the Atari Portfolio.
Atari under Tramiel had a poor reputation in the marketplace. In 1986 a columnist for Atari magazine ANALOG Computing warned that company executives seemed to emulate Tramiel's "'penny-pinching' [and] hard-nosed bargaining, sometimes at the risk of everything else", resulting in poor customer service and documentation, and product release dates that were "perhaps not the entire truth ... Pretty soon, you don't believe anything they say". He concluded, "I think Atari Corp. had better start considering how they're perceived by the non-Atari-using public". The company, however, was much more open to the press than its predecessor Atari Inc., which had refused to let Antic preview forthcoming announcements and even opposed the magazine printing the word "Atari" on its issues.
On August 23rd, 1987, Atari agreed to purchase the Federated Group for $67.3 million. October 4th, 1987, Atari completed the acquisition and gained full control of its own retail stores. In the final quarter of 1987, Federated lost $6.4 million in day-to-day operations. A post-acquisition audit ended on February 15, 1988, and identified $43 million in adjustments to Federated's balance sheet, far more than Atari anticipated. The net worth of its acquisition was reduced by $33 million. Atari's CFO later claimed that they would never have done the deal had they known at the time. Federated's operational losses increased, reaching $67 million for its first full year under Atari in 1988. The FBI began an investigation of Atari in May of that same year for an ongoing scheme involving the profitable import and resale of Japanese DRAM chips in the US, "in violation of U.S. import laws and contrary to import agreements". In March 1989, Atari announced that it would treat Federated as a discontinued operation and took an additional one-time charge of $57 million. Federated was eventually sold to Silo in 1989.
In 1988 Stewart Alsop II said that Atari was among several companies that "have already been knocked out" of the GUI market by Apple, IBM/Microsoft, and others, but Atari Corporation's profits hit their peak that year, at $452 million. In 1989, Atari Corp. released the Atari Lynx--a handheld console with color graphics--to critical acclaim. However, a shortage of parts kept the system from being released nationwide for the 1989 Christmas season. The Lynx lost market share to Nintendo's Game Boy, which had only a monochrome display, but a much better battery life, and was widely available. Also in 1989, Atari Corp. lost a $250 million lawsuit alleging that Nintendo had an illegal monopoly.
As the fortunes of Atari Corporation's ST and PC compatible computers faded, consoles and software again became the company's main focus. In 1993, Atari Corp. released its last console, the Atari Jaguar. The Jaguar was one of the first fifth generation gaming consoles, but due primarily to a games library which was low in both quantity and quality, it was unable to compete effectively against the incumbent fourth generation consoles. Atari Corp. sustained a net loss of $49.6 million for 1995, with $27.7 million in losses during the last quarter of the year alone. Attempting to hedge their bets, in January 1996 Atari Corp. announced the formation of a new subsidiary, Atari Interactive, which would be devoted to publishing games for PC. However, Atari Corp. would relinquish its interest in both the Jaguar and PC software within a few months.
By 1996, a series of successful lawsuits followed by profitable investments had left Atari with millions of dollars in the bank, but without any products to sell because of the failure of the Lynx and Jaguar. In addition, Tramiel and his family wanted out. The result was a rapid succession of changes in ownership. In July 1996, Atari merged with JTS Inc., a short-lived maker of hard disk drives, to form JTS Corp. Atari's role in the new company largely became a holder for the Atari properties; most Atari staff either were dismissed or resigned, and the remainder were relocated to JTS's headquarters. Consequently, the name largely disappeared from the market.
In March 1998, JTS sold the Atari name and assets to Hasbro Interactive for $5 million--less than a fifth of what Warner Communications had paid 22 years earlier. This transaction primarily involved the brand and intellectual property, which now fell under the Atari Interactive division of Hasbro Interactive.
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