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Take-Two Trumps Estimates, Rides  Red Dead Redemption  To Q3 Profit

Take-Two Trumps Estimates, Rides Red Dead Redemption To Q3 Profit

September 2, 2010 | By Leigh Alexander

September 2, 2010 | By Leigh Alexander
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Take-Two has a $12.4 million third quarter profit -- its second profitable quarter in a row -- to show analysts who've raised questions about the publisher's earnings stability amid high costs and long, long development cycles. Nonetheless, despite the positive financials the company also revealed the widely-predicted delay of Rockstar and Team Bondi's LA Noire into next year.

Thanks to the continuing strength of Red Dead Redemption, now up to 6.9 million units shipped, the company reported $354.1 million in sales, up significantly from $94.9 million in sales reported for the same quarter of fiscal 2009. That quarter last year, the company also saw a $58.3 million loss. Take-Two's fiscal third quarter ends July 31. Sales also trumped the company's own estimates, as it previously forecast $250 million to $300 million.

"At a time when consumers have continued to be highly discerning with the way they spend their money, Rockstar has proven that innovative triple-A experiences can still command a blockbuster audience and marketshare," CEO Ben Feder said, praising Red Dead Redemption on the company's call to investors.

Take-Two also cited strong performance from its catalog titles, and adds that digital content "has continued to be a meaningful component" of its sales. With that in mind, the company pointed to its "robust" plan to continue to support Red Dead Redemption with DLC, as it detailed in July.

"Today we are better positioned creatively, financially and geographically than at any other time in the company's history," Feder said on the call. "We're also more diverse than at any other point in our business."

Take-Two also revealed sales up on the wider nine-month view, reporting $785.3 million in sales versus $418.5 million during the same window of fiscal 2009. On the whole, despite its recent successful quarters, the company still sees a $4.5 million loss in the first nine months of fiscal 2010 -- nonetheless, it's a loss exponentially narrower than the 2009 period's $122.6 million in the red.

Analysts have criticized Take-Two's approach to permitting long development cycles in favor of quality, even if it means frequent delays. The highly-acclaimed Red Dead Redemption and the more temperately-received Mafia II were twice held back from their planned dates; last quarter, the publisher moved Max Payne 3 into 2011. Industry-watchers widely expected a shift for LA Noire as well, after early coverage promoted it for a fall release -- yet the game did not make an appearance at this summer's game shows.

The publisher now plans to release LA Noire in "the first half of calendar 2011". But Feder asserted that the game is worth it, describing its technology and design as "revolutionary... never been seen before." He described the "incredible response" upon revealing the title to a meeting of GameStop managers, and said Take-Two is "confident that the investment of additional time will translate into another critical and commercial hit for our company."

Take-Two raised its estimates for the upcoming quarter, planning to see $270 million to $320 million in sales versus a previous $200-$250 million forecast, leading to a boost in its stock, with shares up almost 13% to $10 in after-hours trading.


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