Friday, June 09, 2006

Take-Two Earnings: Somebody Please Buy Us, Part 7

Take Two announced earnings, and in a mild surprise, not only did they suck, they sucked even more than usual. Here’s an excerpt from a story over at Marketwatch:
SAN FRANCISCO (MarketWatch) - Take-Two Interactive Software Inc. late Thursday reported its fiscal second-quarter loss grew five-fold despite higher sales, as the company said it is taking steps to reduce costs amid an industry transition period that continues to challenge video game publishers.

TTWO dipped 15% after-hours trade after gaining 1.5% to $16.77 in the regular session.

Ouch! That’s 15% as in over 1/7 of your total value. Here’s more.

The New York-based video game publisher said it lost $50.4 million, or 71 cents a share, for the period ended April 30, compared to a loss of $8.2 million, or 12 cents, a year earlier. The results included $26.3 million, or 24 cents a share, for asset write-downs.

Analysts were expecting a loss of 11 cents a share, according to estimates compiled by Thomson First Call. The majority of estimates reflect the expensing of stock-based compensation.

Revenue for the period rose to $265.1 million, compared to sales of $222.1 million, for last year. Analysts were expecting revenue of $258.8 million.

That phrase (and I’ve mentioned this before) “assets write-down” means “our quarter was so shitty, let’s just go ahead and bury a few bodies.”

Here’s the full story: Take-Two Earnings.

Take-Two has acquired a brilliant stable of games. They have the singlest most dominant franchise in gaming--Grand Theft Auto. And they can't make money. Not only can they not make money, they're hemorrhaging.

Here's their other problem: it looks like even Grand Theft Auto is starting to leak some fuel. The average review for GTA: Liberty City Stories is in the 80 range. That's a long fall from the consistently 90+ ratings for every other entry in the series. Yes, it's a PSP port to the PS2, but it's also only $19.95.

Expect downward revisions to earnings for the next quarter at least once.

The best scenario for us if someone buys Take-Two, and fast. The problem is that I don't see anyone who will want to inherit their longstanding accounting issues--they'd rather wait until bankruptcy and then bid like crazy for what they want.

Actually, that's wrong. So many companies are do desperate to get into gaming that someone flush with cash will wade in, hold their nose, and make the purchase.

Site Meter