Path: utzoo!utgpu!news-server.csri.toronto.edu!mailrus!hellgate.utah.edu!cs.utexas.edu!uwm.edu!bionet!ig!ames!haven!uvaarpa!murdoch!astsun.astro.Virginia.EDU!gl8f From: gl8f@astsun.astro.Virginia.EDU (Greg Lindahl) Newsgroups: comp.sys.atari.st Subject: Re: Atari Financial condition Message-ID: <1990Mar26.042307.2476@murdoch.acc.Virginia.EDU> Date: 26 Mar 90 04:23:07 GMT References: <1990Mar21.215753.8966@chinet.chi.il.us> <1990Mar22.071155.5496@cunixf.cc.columbia.edu> <1990Mar22.203850.18436@murdoch.acc.Virginia.EDU> <1990Mar23.010055.12116@cunixf.cc.columbia.edu> Sender: news@murdoch.acc.Virginia.EDU Reply-To: gl8f@astsun.astro.Virginia.EDU (Greg Lindahl) Organization: Department of Astronomy, University of Virginia Lines: 63 At the risk of boring everyone... In article <1990Mar23.010055.12116@cunixf.cc.columbia.edu> cmm1@cunixa.cc.columbia.edu (Christopher M Mauritz) writes: > >Your posting was rather annoying, as I TOLD you that I was going to send you >the complete financial report when I got it into computer-readable form >(which I have just completed today). Apologies. Chris has been very helpful, giving me some interesting facts in email. > For your information, the company's >debt/financial worth ratio is roughly 3 to 1. I would call that HIGHLY >leveraged wouldn't you? A companies worth can be estimated in several ways. Atari has roughly US$175 million in debt, US$450 million in sales, and a naieve calculation gives a US$300 million value on the stock market. Yes, the "financial worth" of the company says that it's leveraged. But other analysies of the worth of the company says it isn't very leveraged. What's important is this: even if they kept on performaning poorly, they have enough cash to make interest payments for several years. So they're in no immediate danger of going bankrupt. >Not only that, but they have been consistently delaying payments to >their suppliers (not a good sign) and have been REFUSED credit in the >recent past because of it. This is true. But this is the way Atari has always been, and their payment record has not gotten much worse recently. They behaved this way back when they had two hundred million in the bank... so this is not something that is getting worse and indicates impending doom. I do not know what their current cash flow looks like. But they made an operating profit in the 4th quarter of 1989, so you would expect that the cash flow situation is getting better. > They are MUCH less liquid than most companies >in their industry and they have a very sluggish turnover in inventory. This is true, and this is not good. Also, Chris pointed out in email that Atari's debt rating from Moody's is a B3 - not good. But this was recently re-evaluated and stayed the same. Again, not getting worse. The fundamental source of the disagreement with Chris and I seems to be Atari's new products. He does not believe they will succeed in the market. I believe they are showing signs that they are already succeeding, given that Atari's revenues were up in the 4th quarter of 1989, the first quarter that the Lynx, Portfolio, and the STe (in Europe) were available. This good news comes after 3 down quarters. I have not seen a breakdown of revenue to see if, for example, ST sales were down... what I've heard suggests that Atari video game revenues were definately dropping. Atari is definately not going bankrupt soon. Whether or not the stock is a good investment at $6 is an open question. Cheers! Greg Lindahl gl8f@virginia.edu I gave my lunch for space-sickness research.