NEW YORK -- Warner Communications reported Monday it had sold the loss-plagued Atari home computer and home video game business to a new company headed by computer veteran Jack Tramiel.
Warner acquired the Sunnyvale, Calif., firm in 1976 from founder Nolan Bushnell.
The computer and video game products enjoyed popularity and profits until sales dropped sharply in 1982.
WCI said in a statement that Tramiel and others have invested $75 million in forming the company that will buy the Atari home computer and video game segments. Warner is retaining the arcade games business of Atari.
Tramiel acquired the Atari unit for $240 million in notes, Warner said. The firm also received warrants to acquire common stock of Tramiel's new firm, which in turn received warrants to purchase one million common shares of WCI.
'We have concluded that we must constructively channel our energies and resources to the balance of WCI's businesses,' Warner chairman and chief executive Steven J. Ross said in a statement. Warner's main businesses are motion pictures and records.
Warner said it will report a second quarter loss of approximately $425 million because of writedowns and operating losses in the Atari unit.
For the first quarter of 1984, WCI reported a loss of almost $28 million before taxes and before a gain of $66 milllion on the sale of its cosmetics and fragrance operations.
For all of 1983, the entertainment company reported a loss of $417 million. The Atari operations alone were responsible for $535 million in 1983 losses, on revenue of $1.1 billion.
Tramiel is the founder of Commodore International Ltd., maker of home and office computers. He resigned as president and chief executive officer of that firm in January.
