Take-Two Slumps To $29 Million Q1 Loss

Rockstar, 2K Games and Global Star parent company Take-Two Interactive has announced financial results for its first quarter ended January 31, 2006, revealing net sales for the quarter of a disappointing $265.0 million compared to $502.5 million for the first quarter of fiscal 2005, and net loss for the quarter of $29.1 million, compared to a profit of $55.2 million in the prior year's first quarter. Though the results were particularly made to look bad by the challenging comparison to the strong sales of Grand Theft Auto: San Andreas last year, Take-Two attributed the lower first quarter results to continued retail weakness for video game software and lower retail pricing during the holiday selling season in both North America and Europe, as the industry began to transition to new hardware platforms. According to Take-Two, it expects to return to profitability in its fourth quarter of fiscal 2006. Paul Eibeler, President and Chief Executive Officer, stated, "We are working to manage through the console transition, while positioning Take-Two for future opportunities. We're taking a hard look at every aspect of our business and are balancing the need to manage expenses while investing in creative resources and the infrastructure needed to support our diversification efforts." He continued: "Most importantly, we will continue to focus our development resources on creating great content and further leveraging our proprietary brands. Our commitment to quality products for current and next generation systems is critical to further strengthen Take-Two for the opportunities we see in 2007 and 2008." As for highlights, Rockstar Games' Grand Theft Auto: Liberty City Stories for the PSP has been the number one selling title for the PSP in the U.S. in each month since its October 2005 launch, and Grand Theft Auto: San Andreas for the PlayStation 2, now available in PS2 Greatest Hits and Xbox Platinum Hits versions, also did well for the company. 2K's leading titles in the quarter were Sid Meier's Civilization IV for PC and NBA 2K6 for the Xbox 360, but the Company's Jack of All Games distribution business had decreased sales, year over year, due primarily to reduced sales of current generation hardware and software products and a decrease in average selling prices of games. Going forward, titles planned for the second quarter from Rockstar Games include Midnight Club 3: DUB Edition REMIX for both the PlayStation 2 Greatest Hits program and the Xbox Platinum Hits collection, plus Grand Theft Auto: Liberty City Stories for PlayStation 2, planned for release in late April. Other notable 2K titles include The Elder Scrolls IV: Oblivion for PC and Xbox 360 and Major League Baseball 2K6 for PlayStation 2, Xbox, Xbox 360, PSP, and Nintendo GameCube. Additional products expected for 2006 from Rockstar Games include the newly announced Table Tennis for Xbox 360, Bully for PlayStation 2 and Xbox; two new PSP titles, including an all-new Grand Theft Auto title; and a sequel of a Rockstar brand for a current generation console system. 2K Games' lineup includes The Da Vinci Code for current generation console systems and PC, to be released in conjunction with the Columbia Pictures feature film in May, and Prey on PC and Xbox 360, planned for release this summer. Fall/winter releases include Family Guy for current generation console systems, and the recently acquired The Darkness for next generation systems. For 2007, Take-Two announced that it anticipates a strong next generation lineup from Rockstar Games including sequels to several of Rockstar's most successful franchises. 2K Games' 2007 pipeline includes the next generation console title BioShock from 2K's Irrational Games development studio, and 2K Sports anticipates a solid lineup of sports titles based on licenses with Major League Baseball, the National Basketball Association, the National Hockey League and the National Collegiate Athletic Association.