Exhibit 99.1


JTS UPDATE

SEPTEMBER 25, 1996, 8:30 PM EDT

SAN JOSE, Calif., Sept. 25 -- Tom Mitchell, President and Chief Executive 
Officer of JTS Corporation (AMEX:JTS) (the "Company") commented in an update 
of the Company's operation. "We are pleased to announce that in the next few 
weeks we will start volume production of our second generation of 3-inch hard 
drive products for notebook computers. These drives offer greater capacity at 
a lower cost than the 2.5-inch hard drive currently used in notebook 
computers. In October of 1995, JTS commenced production of 3.5-inch hard 
drives for desktop computers in our factory in Madras, India. During the 
second quarter of this year, we shipped a total of 118,000 drives, or 
approximately 8,000 drives per week. We are currently shipping approximately 
20,000 drives per week and have the capacity to ship 25,000 per week.  We 
expect to double our capacity to approximately 50,000 units per week by the 
end of the calendar year. When the final results are in, we anticipate that 
revenues will have nearly doubled in the third quarter from the second, and 
will have grown over 100% in the fourth quarter versus the third. We expect 
that in the first quarter of fiscal 1998, ending April 30, 1997, we will ship 
over $100 million in hard drives.

"However, as a result of the following factors, we are about 90 days behind 
meeting the publicly stated estimates for the sales forecast set forth in the 
SEC documents filed when JTS merged with Atari. First, the Company is 
experiencing sales delays as several of its new customers have taken longer 
than expected to re-configure their notebook computers as well as their 
manufacturing operations, to utilize JTS's new family of 3-inch hard drives. 
Five companies have now completed their new designs to accommodate a 3-inch 
disk drive format. Second, a major manufacturer decided to switch its order 
for the Company's initial 3-inch hard drive to the Company's new 1 gigabyte 
capacity hard drive, which is expected to ship in October. Third, we had 
expected to initiate a financing approximately 45 days ago and the delay in 
completing a financing has resulted in a slower ramp up of our production 
volume. We had originally forecast that we would achieve $230 million in 
revenues in the 12 months ending January 31, 1997. The company is currently 
pursuing financing. Assuming adequate financing, we now anticipate that we 
will achieve these results by the 12 months ending April 30, 1997 and we also 
expect to turn profitable about that time. Given the magnitude of what we've 
already accomplished, we're confident that the Company is well positioned to 
achieve both its short and long term revenue and profitability targets."

JTS Corporation was founded in 1994 to design, manufacture, and supply 
enhanced-capacity hard disk drives for the notebook and desktop personal 
computer market. The president and chief executive officer of JTS, Tom 
Mitchell, is formerly the president and chief operating officer of Conner 
Peripherals and co-founder, president and chief operating officer of Seagate 
Technology. JTS merged with the Atari Corporation on July 30, 1996.

Except for the historical information contained herein, the discussion in 
this press release contains forward-looking statements that involve risks 
and uncertainties. The Company's actual results could differ materially from 
those discussed here. Factors that could cause or contribute to such 
differences include, but are not limited to, the Company's limited operating 
history; the need for additional financing; the uncertainty of market 
acceptances; the highly competitive market; the Company's ability to achieve 
initial volume shipments of a 1 gigabyte 3-inch drive; the Company's 
dependence on its relationship with Compaq Computer, its dependence on a 
single manufacturing facility and those risk factors discussed from time to 
time in the Company's SEC reports, including but not limited to the Company's 
Registration Statement on Form S-4 (333-06643), in addition to those 
discussed elsewhere in this press release.