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‘GTA V’ Sells 32.5M Units, Ups Take-Two Quarter Profits
February, 3 2014

By Kaja Whitehouse

Sales of Take-Two Interactive’s “Grand Theft Auto V” continued their torrid pace in the last quarter, helping the New York company beat Wall Street’s profit forecast.

The game maker on Monday told investors that it has sold 32.5 million copies of the latest entry in the popular video-game franchise since it debuted on Sept. 17 — helping the company to post profits excluding some items of $210.7 million, or $1.70 a share, for the October-December quarter, more than double the amount a year earlier.
Wall Street was expecting $1.40.

Revenue in the period hit $767.7 million, easily surpassing the $707.4 million that had been forecast.
Take-Two also raised estimates for its fiscal year ending in March to $4.15-to-$4.25 a share on revenue of up to $2.38 billion.

That’s above previous guidance of $3.50 to $3.75 a share on revenue of up to $2.3 billion.
But even with the raised full-year forecast, Take-Two’s January-March quarter was expected to come in at breakeven to 10 cents — below the 13 cents Wall Street was banking on.

The miss rattled investors, who pushed down the company’s shares 2.9 percent in after-hours trading, to $18.35.
“The big question with this company is: What are their normalized earnings?” said Todd Mitchell, an analyst at Brean Capital.

“They need to be constantly engaging the customer,” he said.

Leveling out sales outside of quarters when blockbuster franchise titles are released is the bane of many a game maker.

Last month, it was announced that “GTA V” was the top-selling video game of 2013, according to research firm NPD Group.

The 32.5 million units sold surpassed the 25 million-plus units the company sold for the previous franchise release, “GTA IV,” according to reports.

While the “GTA” franchise remains strong, Take-Two and other game makers are moving to capture sales as the industry transitions to a digital format.

“Strong results during the December quarter with mixed March quarter guidance could suggest” the online version of “GTA” “is not monetizing at as high a rate as some expected,” Michael Olson, an analyst at Piper Jaffray, wrote in an investor note, according to Bloomberg.

Olson has an overweight rating on the stock, the equivalent of buy, Bloomberg reported.
Analysts like Mitchell say they want Take-Two to smooth out its earnings, particularly by focusing on its nascent online segment, which can churn out revenue throughout the year.

Take-Two on Monday said net revenue from digitally delivered content grew 42 percent over last year’s quarter to $132.8 million.

“I feel very optimistic about GTA online,” Take-Two’s chairman and CEO Strauss Zelnick told investors in a conference call.

“We’re highly confident with our outlook to be profitable in the next year, and that’s attributable to the company’s strategy of being the most creative, the most innovative and most efficient company in the business,” he said.

Source: NY Post