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Take-Two’s ‘BioShock Infinite’ Propels 4th Quarter Profit as ‘Grand Theft Auto’ Awaits
May, 13 2013

Dow Jones/Ian Sherr

Take-Two Interactive Software Inc.'s (TTWO) fiscal fourth-quarter income swung to a profit as the company's "BioShock Infinite" sci-fi shooting game flew off store shelves.

The New York game maker said it tallied a profit of $22.5 million on $299.5 million in sales, compared with a loss of $66.8 million a year prior on revenue of $148.1 million. Excluding deferred revenue and other items, the company said it earned 38 cents a share, up from a loss of 60 cents a share the same time last year. Analysts polled by Thomson Reuters had been expecting a profit of 18 cents a share.

Much of Take-Two's success this quarter was driven by its latest BioShock game, which has received the best reviews of any game release so far this year and sold 3.7 million units, the company said. In addition, Take-Two said its "season pass" service to offer customers access to new story lines and other items for the game when they're released helped bolster the game's financial success.

"We couldn't ask for anything more," said Strauss Zelnick, Take-Two's chief executive. He added that the game's success underscores his belief that the videogame console industry, which has suffered with contracting sales of new packaged goods in U.S. retail stores, is still a healthy market so long as the game itself is good.

Take-Two's results come as the company is preparing for the September release of "Grand Theft Auto 5," the latest installment in its crime and world exploration franchise, for which the company is most known. Mr. Zelnick said he has "very high" expectations for the title, which historically has been a primary growth driver for the company.

But Take-Two has worked to avoid the boom-and-bust cycle that accompanied past Grand Theft Auto games. "Red Dead Redemption," an old-west inspired game performed well when it was released in 2010, as have many of the company's titles leading up to the latest BioShock this year. Mr. Zelnick said sales of older games, such as "Red Dead," represented 25% of the company's adjusted revenue in the fourth quarter and for the full year.

Take-Two has juiced those sales by rereleasing older games such as "Max Payne" and "Grand Theft Auto 3" on smartphones and tablets. Mr. Zelnick said his goal is to continue increasing sales of older games alongside newer ones.

Take-Two said it expects a current-quarter adjusted loss of between 55 cents a share and 70 cents a share, on sales between $100 million and $125 million. Other game companies have also said they expect the pre-summer months to be relatively quiet with few releases and little incentive for customers to spend.

Further complicating things are new videogame consoles planned by Microsoft Corp. (MSFT) and Sony Corp. (SNE, 6758.TO), both of which are expected to be released later this year. Analysts have said customers likely will hold off some spending as they await the new devices.

For the full year, Take-Two said it expects to pull in an adjusted income of between $2.05 a share to $2.30 a share on sales between $1.75 billion and $1.85 billion. Analysts on average are expecting the company to post per-share profit of $2.26 on $1.78 billion in sales.