Atari Inc., the troubled home computer and videogames company, is getting a new chairman and chief executive officer, its parent, Warner Communications, said yesterday.
James J. Morgan, an executive with Philip Morris, Inc., the giant cigarette and soft drink company, will replace Raymond E. Kassar as head of the Sunnyvale, Calif.-based company, Warner spokesmen said.
Kassar, who in less than six years guided Atari from a multimillion-dollar enterprise to an international multibillion-dollar consumer electronics giant, "resigned to pursue his own interests," according to an Atari spokesman, but will continue as a consultant. Rumors of a Kassar "resignation" had been circulating for months.
Morgan, 41, currently is executive vice president of Philip Morris USA, which handles the company's $4.3 billion cigarette operations.
"As a marketing person, he's about as good as anyone in the country," said Jim Bowling, a Philip Morris senior vice president and assistant to the chairman. "No matter what they pay him, from their standpoint it's got to be one of the bargains of all time."
The move is reminiscent of Apple Computer's recent hiring of John Sculley, an executive with PepsiCo, as its new president. Sculley was lured with a multimillion-dollar compensation package.
Observers said that the personal computer industry is becoming more aware of consumer preference and marketing as it matures. The executive shifts apparently reflect the belief that officials with established marketing-savvy companies are in the best position to help the computer companies minimize growing pains while guiding them to greater revenues and market share.
Unlike Sculley, however, who takes the helm at a fairly healthy Apple, Morgan is moving into what is clearly a "turnaround" situation at Atari. The change of command comes in the wake of massive financial losses, heavy layoffs and a major corporate restructuring.
Warner has announced that Atari is expected to lose more than $100 million during the first six months of this year. The company recently revealed that it would prune away more than 1,000 white-collar workers as part of a cost-saving consolidation of its video-game and home computer divisions.
"I'm going into this with my eyes wide open," Morgan said in a telephone interview. "I know there are problems. This offer came at a point in my life when I believed it's the time to try something new and different. If I didn't do it now, I might never do it."
Morgan said that successful marketing could be the key to breaking Atari away from the price wars that are raging throughout the home computer industry. "Consumer marketing, when it's done well, transcends price," Morgan contended. "Price often becomes an excuse for the failure to market well in other ways."
More important, said Morgan, aggressive marketing offers the chance to reshape the company's profile in the consumer's eyes. "The biggest problem Atari has is that it is perceived by the public as a video games company," he said. Somehow, said Morgan, Atari will have to be weaned away from its financial dependence on videogames as well as its video game image.
Consequently, Morgan said that he is looking towards education as well as entertainment as a market opportunity. "I read somewhere that 14 million people in this country will require retraining as a result of shifts in our economy," Morgan said. "Why shouldn't Atari hardware and software be made part of that retraining effort?"
Although Atari has so recently reorganized, Morgan said that he is prepared to make more changes. "I have been given a free hand by Warner to make whatever observations I make and do whatever I want to do," he said. "I view one of my major responsibilities as a transfer of those successful elements of the 'corporate culture' I've grown up in to Atari."