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Take-Two Cuts Forecast On Lagging  MLB , Holiday Games; Delays  Max Payne 3

Take-Two Cuts Forecast On Lagging MLB, Holiday Games; Delays Max Payne 3

December 3, 2009 | By Staff

December 3, 2009 | By Staff
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Grand Theft Auto publisher Take-Two has unexpectedly cut its profit outlook due to poor Major League Baseball game sales and underperforming holiday titles -- delaying Max Payne 3 and sending its shares plummeting.

The company now expects reduced full-year revenue of $950 to $975 million for the year ending October 31, 2009, and an increased loss of $1.10 to $1.15 per share.

According to Take-Two, results "will be below its prior guidance due to several factors, the largest being the performance of its Major League Baseball titles in the fourth quarter."

Inventory write-downs on last-gen software in its distribution business also played a role, and the company says its key holiday releases are performing "lower than expected."

Take-Two also provided a much gloomier outlook into its fiscal first quarter ending January 31, 2010 and fiscal year ending October 31, 2010. It now expects a non-GAAP loss of $0.40 to $0.60 per share on $1.0 billion to $1.2 billion in revenue for the entire year, with a loss of $0.40 to $0.50 on $210 million to $260 million in revenue in the first quarter.

The Companys drastically worse fiscal 2010 expectations "primarily reflect the movement of one triple-A title out of the fiscal year" - the unspecified title appears not to have been announced.

The company is also expecting a net loss of $30 million to $35 million on baseball game slowdowns, as well as higher development costs for certain titles, and "the impact of the continued difficult retail environment."

Take-Two noted that it has "a strong pipeline of titles that remain on plan for launch in 2010", nonetheless, including BioShock 2, Mafia II, Max Payne 3 and Red Dead Redemption. It also clarified that BioShock 2 is on target for a global release on February 9, 2010, and Red Dead Redemption is planned for April 27, 2010. Mafia II is scheduled to follow during the first half of calendar 2010, and Max Payne 3 is now planned for release during the fourth quarter of fiscal 2010.

Strauss Zelnick, Chairman of Take-Two, commented alongside the announcement: "Our anticipated results for the balance of fiscal 2009 primarily reflect the challenges related to our Major League Baseball business, inventory write downs in our distribution business, and retail conditions that have proven to be more difficult than the assumptions built into our prior outlook."

"These factors were partially offset by the performance of our catalog business and a number of our holiday titles, as shown by the successful launch of Borderlands and the leading ratings and market share of NBA 2K10. Looking ahead, we remain committed to our goal of operating profitably on a non-GAAP basis; however, we do not currently expect to achieve that goal in fiscal 2010."

As a result of the announcement, Take-Two stock plummeted 21 percent to $8.56 in after-hours trading, as investors showed their displeasure with the significantly decreased outlook.


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