Take-Two Reports Losses, Slashed Revenues, Delays Titles

The industry is suffering from tough year-over-year comparisons to Grand Theft Auto IV's record-breaking release month, and apparently none is hit so hard as publisher Take-Two itself. As it reports heavy losses for the quarter, the publisher is shifting Mafia II and Red Dead Redemption into the first half of fiscal 2010, citing the need for more development time and the benefit of a better release window for market performance. "We have a pretty stern policy at Take-Two about serving no wine before its time," said company president Ben Feder on Take-Two's results call to analysts. "We'll give it the time it needs. Our ability to move a title out into the [next] year reflects how far Take-Two has come as far as diversity in our product line and flexibility." When asked, Feder said the company doesn't expect to delay either game any further: "Otherwise, we wouldn't have announced a release window as we have. We know Christmas is a competitive season, but mostly, what's driving this is making sure the games are developed [to] the right quality [level]." The company saw its second fiscal quarter revenues more than halved at $229.7 million, compared to $539.8 million for the same period last year when the game launched -- Take Two's second quarter ends April 30. The company also saw a $10.1 million loss during the quarter -- last year, it reported $98.2 million in income. Its sales during the quarter were led by Major League Baseball 2K9, GTA: Chinatown Wars and continued sales of GTA IV, with help from the downloadable Lost & Damned expansion for Xbox 360. With today's results also comes the announcement that the next exclusive episode, The Ballad Of Gay Tony, is slated for this fall -- prior to October 31. The six-month picture doesn't allow for a much stronger comparison -- $486.5 million in revenue compared to $780.3 million during the same six months last year. First-half losses now net $60.5 million -- when the company reported about that much in income last year. The company does note it paid out $11.5 million in stock-based compensation, and spent $6.7 million on "unusual matters," presumably legal fees related to recent stockholder lawsuits regarding the executive board's handling of Electronic Arts' takeover attempt last year. Take Two's results are just a little bit better than analysts had forecasted, and it met its own guidance. It still maintains $180 million in cash on hand. But it forecasts its losses to continue into the third quarter, planning for the loss of 55 to 65 cents per share on $145-$165 million in revenues. And as it implements cost-cutting measures and adjusts for a lower tax rate, Take-Two lowered its revenue target to $1.05 billion to $1.15 billion, from $1.1 billion to $1.25 billion.