Atari was in
serious financial trouble and Warner had begun a
desperate programme of layoffs and restructuring in 1984
(thousands would loose their jobs as entire departments
were cut and projects cancelled). When the deal with the Tramiel family
was concluded with Warner on July 2nd 1984, they continued re-structuring the entire
organisation as quickly as possible in a dramatic effort to stop the
company loosing money - and if it didn't do it quickly,
any chance of rescuing the company and its brand would be
included closing the Atari
Inc. European HQ in County Limerick Ireland where 250 people
worked, in fact, thousands lost their jobs worldwide as
Jack and family reorganised their company for the launch of a new line
of computer systems. Atari employed over 10,000
people in early 1984, it would have only 1,750 employees
As part of the deal,
Jack Tramiel broke Atari into two entities. Jack didn't want the Arcade Division of
Atari (the part that was actually in profit) as this wasn't part of his future plans with
the new company.
Warner kept the Arcade
division (later selling it to Midway Games Inc.) and the rest went to the
AtariTel was kept by
Warner Communications and later sold.
In retrospect, the
Arcade division would have been better kept as part of Jack's new Atari,
not only because it was making money, but it would serve as a direct
line for Arcade game conversions for it's own video consoles; it would
have been especially helpful for the Jaguar launch which would take
place almost 10 years later - but that's another story.
The rise and fall would
continue, but it was now called Atari Corp.