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Take-Two Cuts Loss, Lifting Shares
December, 19 2007

Rex Crum

SAN FRANCISCO (MarketWatch) -- Take-Two Interactive Software Inc. shares rose as much as 5% Wednesday, gaining as the video-game publisher cut its fourth-quarter loss nearly in half due to strong sales of new titles such as "BioShock" and "NBA 2K8."

The shares rose 94 cents to $18.98 in the wake of the New York-based company's results issued late Tuesday.

TTWO 19.03, +1.00, +5.6%) reported a loss $7.1 million, or 10 cents a share, for the fourth quarter ended Oct. 31, generating revenue of $292.6 million.

A year earlier, the compan posted a loss of $14 million, or 20 cents a share, on revenue of $266.6 million.

Analysts surveyed by Thomson Financial had forecast, on average, that Take-Two would come in with a loss of 23 cents a share on revenue of $293 million.

Citigroup analyst Brent Thill raised his rating on Take-Two to buy, up from hold previously, and lifted his price target to $25 from $23. In a research note, Thill said that he was more comfortable with the release of the upcoming "Grand Theft Auto IV" video game, which Take-Two had previously said it would delay until the second quarter of the current fiscal year. "Historically, [the] best time to buy Take-Two is about four months ahead of a 'GTA' launch," Thill said.

Mixed Bag

The company said fourth-quarter results were fueled by such new titles as "BioShock," which shipped 2 million units since being released in August, as well as "NBA 2K8" and "Carnival Games." The latter was developed specifically for the Nintendo Wii system and shipped 500,000 copies.

On a conference call to discuss the results, Chief Executive Ben Feder called Take-Two's quarter "satisfactory," adding that "the overall strength of our industry bodes well" for the company.

Still, the video-game publisher gave a first-quarter sales outlook that fell below analysts' forecasts.

For the January quarter, Take-Two forecast a loss, excluding one-time items, of between 50 cents and 60 cents a share, on revenue pegged in a range of $175 million to $225 million. The revenue outlook fell short of analysts' $279 million average forecast.

Take-Two also said its results for the fourth quarter were helped by strong sales of prior versions of its "Grand Theft Auto" titles. The company had to delay the release of "Grand Theft Auto IV" until the second quarter ending in April, in order to complete development of the game.

Brendan McCabe, analyst with CIBC World Markets, said that Take-Two's results show the company is improving under a new management team but that there is "still a long journey left" as it tries to make up for not having "Grand Theft Auto IV" out in time for the end-of-year holiday shopping season.