Final Take-Two Results See Company In Red

Officials from Take-Two Interactive have finally announced the company’s financial results for the third and fourth quarters and for the company’s full fiscal year. The results were delayed, incurring stock delisting warnings from Nasdaq, as a result of the high profile Securities & Exchange Commission (SEC) investigation into stock option irregularities. The results released today are for the fiscal year 2006 but also include restated figures for the fiscal year 2005. Net revenue for fiscal 2006 was $1.038 billion, down from $1.201 billion in fiscal 2005 – which included the launch of the hugely successful Grand Theft Auto: San Andreas. The net loss for the year was $184.9 million, compared to profit of $35.3 million in 2005. Net revenue for the fourth quarter ended October 31st, 2006 was $266.6 million, compared to $306.8 million a year previously. Net less for the fourth quarter was $266.6 million, reduced from $306.8 million twelve months previously. Net revenue for the third quarter ended July 31st, 2006 was $241.2 million, up from $169.9 million the previous year. Net loss for the third quarter was $91.4 million, significantly increased from a $29.0 million loss in 2005. The company blamed the fall in results on the transition between console generations; specifically delays and acceptance of new hardware by consumers and a lower average selling price of current generation software. Higher development costs for next generation software were also blamed for the results, as well as new investment in the company’s 2K Sports brand. However, the company claims that such investments will have a positive impact on fiscal 2007 results. As usual Rockstar Game’s Grand Theft Auto franchise was the company’s best selling title, with Grand Theft Auto: Liberty Stories on PlayStation 2 and Grand Theft Auto: Vice City Stories on PSP being the best selling overall titles during the fiscal year. Bully for PlayStation 2, Rockstar Games Presents Table Tennis for Xbox 360 and The Elder Scrolls IV: Oblivion for PC and Xbox 360 were also mentioned as strong sellers. However, the company noted that, despite focusing significant development efforts on titles launched for the PSP and Xbox 360, sales lagged significantly behind those of PlayStation 2 titles. For the first quarter ended January 31st, 2007, the company anticipates net revenue in the range of $265 million to $275 million, with a net loss in the range of $23 million to $25 million. For the full fiscal year 2007, Take-Two anticipates revenue in the range of $1.2 billion to $1.25 billion and expects to return to profitability in the fourth quarter and break even for the full fiscal year 2007. The company also notes that it expects its Form 10-Q to be filled on time for the first quarter. Paul Eibeler, Take-Two's president and CEO, commented of the results: "The console transition has been extremely challenging for us. While we are not satisfied with the Company's financial performance in 2006 and the first quarter of 2007, we are confident that our strategic decisions will pay off over the next year and beyond. We strongly believe that the significant financial commitments we have made to next-gen development and our sports business will position Take-Two to leverage the opportunities for our core franchises and sports titles as the hardware install base grows." He concluded: "Our internal studios continue to create some of the highest rated products in the industry, with consumer anticipation and demand for our proprietary next-gen titles Grand Theft Auto IV and BioShock, along with our sports lineup, contributing to our expected return to profitability."