Take-Two Profit Above Street, Raises Outlook—Reuters
June, 8 2010
SAN FRANCISCO (Reuters) - Take-Two Interactive Inc (TTWO.O) raised its outlook for the fiscal year on strong demand for its "Red Dead Redemption" video game, sending its shares up more than 2 percent on Tuesday.
Take-Two said the game, which hit stores in May, has sold more than 5 million units so far.
As a result, the publisher, which has been hampered by cost overruns and game delays, raised its outlook for fiscal 2010. It now expects a loss, excluding items, of 10 cents to 30 cents a share on revenue of $880 million to $980 million.
Wall Street was predicting a loss of 38 cents a share on revenue of $914 million for the year.
The company had previously expected a loss of 40 cents to 60 cents a share on revenue of $725 million to $925 million for fiscal 2010.
Wedbush Morgan analyst Michael Pachter said "Red Dead Redemption" is a bona fide hit and the company appears to be managing costs better. He said the new outlook should ease investor fears about additional game delays this year.
"What's good is they are more dependable about getting games out, and they firmed up their revenue guidance," he said.
Take-Two Chairman Strauss Zelnick said he remains cautious on the consumer, and that the company continues to take a conservative approach to its outlook. But he said Take-Two's performance is improving.
"We're doing a better job in efficiency and execution," Zelnick said in an interview with Reuters.
The gaming industry is still confronting a troubled economic outlook. Video game software sales in the United States -- the world's biggest market -- sank 22 percent in April, according to industry tracker NPD. Software sales are down 8 percent for the year in the U.S.
The video game publisher posted a net profit of $16.8 million, or 20 cents a share, in the fiscal second quarter ended April 30, versus a year-ago net loss of $10.1 million, or 13 cents a share.
Excluding items, the company earned 34 cents a share, ahead of the average analyst estimate of 26 cents, according to Thomson Reuters I/B/E/S.
Revenue rose more than 50 percent to $268 million, versus Wall Street's estimate of $281.3 million.
Sales in the quarter were led by "BioShock 2" and better-than-expected demand for older catalog titles.
Take-Two is best known for its "Grand Theft Auto" franchise, one of the top-selling of all time. The fourth installment, released in 2008, has sold more than 17 million units.
Take-Two is in the midst of a turnaround effort, and it has promised to rein in soaring development costs. Activist investor Carl Icahn has taken a nearly 14 percent stake in the game publisher.
Zelnick declined to speak about Icahn's influence on the company.
For the current quarter Take-Two forecast a loss, excluding items, of 10 cents to 20 cents a share on revenue of $250 million to $300 million. That compares with the consensus estimate for a loss of 39 cents a share on revenue of $169 million.
Shares of New York-based Take-Two fell 1.1 percent to close at $10.52 on Nasdaq and rose to $10.75 in extended trading.