Atari, the nation's largest video games and personal computer company, is expected to announce shortly that it will lay off between 500 and 800 employes in consolidating two of its largest divisions.
The company announced that Michael J. Moone would leave his post as president of its Consumer Electronics Division, which makes video game software and video game consoles, to head a newly-created products development unit.
The actions come in the wake of a first-quarter loss of $18.9 million by Warner Communications Inc., Atari's parent company. Warner spokesmen say that the loss is directly attributable to Atari, which itself lost more than $45 million.
Atari is expected to consolidate its Home Computer Division--which makes the Atari 400, 800 and 1200 personal computers--with the Consumer Electronics Division, which makes the popular video game units and cartridges. Atari also has a division which makes coin-operated video arcade games and recently announced the formation of a division that will market "smart" telephones.
Although still the industry leader in video games, the Sunnyvale, Calif.-based company's market position has eroded. Company spokesmen say that Atari's market share in video games cartridges has dropped from 75 percent in 1980 to less than 44 percent today.
Last December, the value of Warner stock dropped by more than $1 billion in three days as a result of unexpectedly poor sales by Atari. The recently announced first-quarter loss caught many in the industry--including Atari--by surprise. Several sources in the company expected that earnings would only be flat or slightly lower.
A source within Warner Communications said that the consolidation is an effort to streamline Atari's corporate structure and eliminate the unnecessary redundancies that emerged as the company was growing rapidly. In 1977, Atari had revenues of $40 million. In 1982, the company reported revenues in excess of $2.1 billion.
Atari has been buffeted by increasing competition in both its video games and personal computer business, say industry observers.
The move is seen as a positive one by several industry analysts. "It's the only thing that makes sense," says Lee Isgur, an analyst at Paine, Webber, "it's recognition of the fact that video games and personal computers are merging into the same marketplace."