Microprose
Activision 1.0
Atari
Sega
The list goes on

Just to nitpick a little, Sega still makes games. ;) and the company do still exist.
[url=]http://www.sega.co.uk/?t=EnglishUK[/url]

Activision & Atari still exist as well but they're just other companies running around wearing an activision / atari mask. I thought the same happened to sega sometime after the megadrive took the megaplunge

Well, the Sega Saturn crashed bad in US and Europa, I don't really know how the Dreamcast did, but I don't think it did any good. But Sega is still getting games out.. and Sonic still is popular. (bit strange that) ;) but I doubt the Megadrive really would be the main reason Sega got in trouble. ;)
Edit,
To bad the Sega Gamegear didn't become a success, it was 10 times better than the Gameboy, would have loved to see the 3rd gen of it, or even a 2nd gen. (Segas handheald console, first whit colour screen)

I actually meant dreamcast, got my consoles mixed up

I believe it did well enough in the Brazil area market, such that a few revisions were done. Not sure if I would call them a 2nd/3rd generation, as the 'power' of the machine remained the same. (Not that it really helps anyone outside of Brazil)
I still have my Gamegear. But I need to learn how to solder to fix a faulty chip on it and get it working again.

Sega's 8- and 16-bit systems were incredibly successful in Brazil. The Master System and Mega Drive (and probably the Game Gear) are still actively produced there by Tec Toy, typically with dozens or even hundreds of games built in, and have seen ports of games such as Duke Nukem 3D and Mortal Kombat 3 as well as a number of original titles. Tec Toy has recently announced their own console called the Zeebo, which will use digital distribution exclusively to offer the likes of Quake, Prey, and Need for Speed Carbon.
Despite the obvious similarities to the Nintendo bootleg industry in China, all of these products are officially licensed by Sega and other copyright holders. Seriously.

SPAM! Go away!