The seller of such games as "Indigo Prophecy" and "Dragon Ball GT: Transformation," had a fiscal second-quarter net loss that widened to $25.2 million, or 20 cents a share, from net loss of $16.9 million, or 14 cents, in the year-ago quarter ended September 30. Atari's loss from continuing operations in the most recent quarter was 19 cents per share. Revenue dropped to $38.4 million from $68.0 million. Analysts, on average, had expected the company to post a net loss of 14 cents a share and a loss excluding items of 18 cents a share on revenue of $30.5 million, according to Reuters Estimates.

In a conference call with analysts, Atari chief executive Bruno Bonnell called the retail environment "lackluster." He added that the company would be shipping major releases -- including its first Xbox 360 title "TimeShift" -- in the second half and soon announce two new directors. Microsoft is shipping its next-generation Xbox 360 console to North American stores on November 22. Game sales have slumped recently as consumers wait for games for the new system.

Atari in recent months has closed studios and sold non-core assets. Its parent company is Infogrames Entertainment of France. Company shares, which closed up a penny to $1.28 on the Nasdaq prior to its financial report, were unchanged in after-hours trade.