I wish I could say I love Atari (NASDAQ:ATAR). Well, actually, I do love its classic portfolio of games. I just don't love the company's prospects as much as I do those of competitors such as Electronic Arts (NASDAQ:ERTS), THQ (NASDAQ:THQI), and Activision (NASDAQ:ATVI). (As a matter of fact, I recently professed my love for Activision.) Atari still hasn't convinced me that it's a viable investment idea in comparison to its much more well-positioned colleagues, even though its losses are narrowing.

Let's do a comparison. Activision, like Atari, just reported its third-quarter numbers (although they are preliminary). Revenues were essentially flat for the publisher compared to last year, growing a little less than 1%. Same thing with EA -- its own revenue base remained about as flat. Then there's THQ, which increased its sales by 33%. What happened at Atari? Revenues plunged by more than 50% to $47.3 million. Granted, it's going to take time to rebuild the top line after all the trouble Atari's been through in the last couple of years, but I think you can begin to see why I think of other publishers first when considering the video-game sector. I'll take flat top-line growth during a holiday period over a 50% plunge.

I'll say this for Atari, though -- it has improved its operating performance. Whereas an operating loss was observed in last year's quarter, the past three months saw the company book a positive $1.7 million. Eliminating the effect of discontinued operations, Atari achieved a profit of $1.7 million, or $0.13 per share. Things do seem to be getting better in terms of the numbers.

But when I think of big software franchises, I invariably think of the big triumvirate of EA, THQ, and Activision. Madden, Call of Duty, Destroy All Humans, Guitar Hero -- Atari would kill to have these properties. The publisher will need to get out there, grab the proverbial bull by its equally proverbial horns, and take full advantage of all the new systems out there from Sony (NYSE:SNE), Microsoft (NASDAQ:MSFT), and Nintendo (OTC BB: NTDOY.PK). It's going to have to find some fresh blood for its portfolio and then market the hell out of it. Maybe the new Godzilla game, set to be released on the very popular Wii system, will help out; I always liked the giant lizard and his radioactive breath, and I think he'll be pretty fun considering the Wii's novel controller.

No matter what, Atari will have to come up with something a lot more substantial than its recent one-for-10 reverse stock split. Indeed, splits do nothing for Fools, since they don't change the intrinsic value of a company one iota. Atari is certainly improving its earnings scenario, and it may eventually figure a way out of its quagmire. For now, though, it isn't a low-priced value.

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Fool contributor Steven Mallas owns shares of Activision. As of this writing, he was ranked 16,396 out of 22,022 investors in the CAPS system. Don't know what CAPS is? Check it out. The Fool has a disclosure policy.