Well, either you're closing your eyes to a situation you do not wish to acknowledge or you are not aware of the caliber of disaster indicatedThat's Professor Harold Hill, courtesy of "Ya Got Trouble" in The Music Man.
Every time I see a Take-Two press release, I'm reminded of Professor Hill, because nothing is ever quite what it seems. On Monday, Take-Two issued a press release, and what everyone squawked about was the lead:
New York, NY – June 26, 2006 – Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today announced that on June 19, 2006, the Company received grand jury subpoenas issued by the District Attorney of the County of New York requesting production of documents, covering various periods beginning on October 1, 2001, including those relating to: the knowledge of the Company's officers and directors regarding the creation, inclusion and programming of hidden scenes (commonly referred to as "hot coffee") in Grand Theft Auto: San Andreas, the submission of Grand Theft Auto: San Andreas to the Entertainment Software Rating Board for a rating, and the Company's disclosures regarding hot coffee; ...
That looks like yet another investigation related to the infamously stupid Hot Coffee mod, and that's what all the gaming sites picked up. Once again, the government is taking a dead horse and beating Take-Two with it. Cue outrage!
I actually felt a little sympathetic, until I carefully read THE REST of the press release (this section starts right after the previously quoted section ends):
...disclosures and presentations by the Company of certain events, including acquisitions, partnering arrangements and earnings results; invoices from, payments to, and termination of PricewaterhouseCoopers LLP and retention of Ernst & Young LLP; acquisitions by the Company in 2005; certain compensation and human resources documents with respect to the Company and certain of its current and former officers and directors; and documents concerning the activities of the Company's Board of Directors and Committees thereof.
Wait just a damn minute. This isn't an investigation of Hot Coffee--it's an investigation of fraud. Earnings results, the termination of their auditors, the acquisition of other companies (and how it was recorded on their books), and compensation for executives.
In other words, this isn't about boobies. It's about crime. Allegedly.
Take-Two's strategy was to lead with Hot Coffee and hope that no one read the rest of the press release. Nice try.
Last year, on June 14, Take-Two's stock was at $29.34 a share. Today, just over a year later, it closed at $10.85. Down 63%.
I saw a few months ago that I thought Take-Two would have to be bought out by the end of the year to survive. I still believe that's correct.
Thanks to Sean McIlroy for sending me an e-mail about this.