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Take-Two Interactive (TTWO)
Take-Two Interactive Reports Q3 Loss
The downturn in the economy has produced some winners and some losers. Some companies have produced impressive results while others have posted decline after decline. Take-Two Interactive falls somewhere in between. The videogame maker is able to produce popular games, but can't seem to get earnings where they need to be. The company's popular game titles such as Grand Theft Auto IV have been blockbuster hits, but losses have continued to rise since the start of 2009. The third-quarter didn't shape up much better. Take-Two reported a third- quarter loss of $55.5 million as a result of declining sales. The loss was smaller-than-expected, but still disappointing. What were the main factors that contributed to the decline in sales? Will the company make a turnaround soon?
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| Stock Analysis |
It's hard to believe that Take-Two experienced a 68% decline in sales during the third-quarter. One would never guess based on the long lines of consumers that wait anxiously outside of stores to pick up the newest releases from the company. The economic downturn put a big chunk of these individuals on the sidelines as they cut back on unnecessary expenses. Aside from the economic downturn that has been taking its toll on the long-resilient videogame industry, Take-Two faces concerns it can't make money without new releases in its “Grand Theft Auto” franchise. Last year, the company made a whopping $500M in two weeks following the release of Grand Theft Auto IV. So it's no surprise that the company is itching to get newer versions of this popular series released. The company's decision to delay popular titles such as BioShock 2 and Manhunt 2 has also contributed to recent declines. This factor just reiterates the point that Take-Two isn't a strong publisher when it doesn't have a new version of its flagship franchise in the marketplace.
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Take-Two is remaining cautious about the rest of the fiscal year. The company lowered the top end of its forecast range for earnings and revenue in the current quarter ending October 31. It now expects earnings excluding items of 30 cents to 35 cents a share, on revenue of $350 million to $375 million. This comes two months after the company reduced its 2009 guidance. Chairman Strauss Zelnick stated that the retail environment remains challenging and as a result the company has decided to maintain a prudent approach to its guidance. Unfortunately, Take-Two may need some more blockbuster releases to address the decline in sales. Consumers are still hesitant about certain purchases, so the game maker will likely still face a bumpy path to recovery.
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More Take-Two Thoughts
Take-Two Interactive reports Q3 loss -- Does Take-Two have a reputation for a shallow pipeline of shareholder-enhancing software?
Take-Two in Trouble -- This blogger thinks that Take-Two could've avoided this mess by taking the Electronic Arts (ERTS) deal.
Take-Two Settles Suit -- Take-Two finally ended what must have been one of the longest running scandals in the gaming industry.
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Profile |
Click here to view a detailed profile of Take-Two Interactive.
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