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Take-Two Shows Increased Loss, Reduced Forecast
by Nich Maragos, Simon Carless [PC, Console/PC, Mobile Console, Career, Student/Education, Hollywood]
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September 7, 2005
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Take-Two Interactive has released its Q3 2005 fiscal results, showing that net sales increased by 6% over Q3 2004, from $169.0 million to $169.9 million USD, but the firm's net loss was double the net loss of Q3 2004, increasing from $14.4 million to $28.8 million USD. The company, which includes the Rockstar, 2K Games, and Global Star publishing brands, offered no specific explanation for the increased net loss, but fallout from the "Hot Coffee" modding scandal, which prompted a likely expensive recall of Grand Theft Auto: San Andreas from shelves, seems likely to be part of the problem: the company had already lowered yearly expectations due to the problems.
In its reports, Take-Two ascribed the increased sales performance, a relative high point compared to the rest of the results, to titles such as Charlie and the Chocolate Factory on multiple platforms and Sid Meier's Pirates! on Xbox, as well as Rockstar-derived games such as Midnight Club 3: DUB Edition on PSP and Grand Theft Auto: San Andreas on Xbox and PC, though offered no specific sales figures or milestones for the titles.
Further bad news for the company came when Take-Two announced lowered expectations for the rest of the fiscal year, due in large part to key Rockstar titles Bully and the Japanese SKU of Grand Theft Auto: San Andreas moving beyond the October 31st fiscal year end. However, Grand Theft Auto: Liberty City Stories for PSP is still due for fiscal 2005, and to help ameliorate the revenue losses, Sid Meier's Civilization IV has been moved up into the current year from its former fiscal 2006 release.
The updated guidance for investors stands at $1.4 billion to $1.5 billion USD in net sales for the 2005 year, and $350 million to $400 million in net sales for the first quarter of FY 2006, but investors were not happy with the outcome of the results, sending Take-Two shares down almost 7 percent to $22.60 in after-hours trading.
Take-Two president and CEO Paul Eibeler was bullish, despite these setbacks, commenting: "Take-Two is in an excellent competitive position as our industry enters its next cycle of growth. We have a high quality line-up that is the most diverse in our history--including the latest versions of established franchises, as well as newer titles that will become tomorrow's hits. Our Rockstar, 2K Games, 2K Sports and Global Star labels are building a product pipeline that will appeal to a broad range of consumers."
Going forward, Rockstar cryptically announced a number of unknown titles for the forthcoming financial year, commenting: "Additional fiscal 2006 products include two new titles for the PSP system, as well as extensions of the Grand Theft Auto franchise." In addition, 2K Games titles for the 2006 financial year "...include Prey, Snow, and 24: The Game from 2K Games and various MLB, NBA and other sports titles from 2K Sports."
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