Take-Two 4Q loss doubles on higher costs
GTA publisher expects 1Q sales decline
By Danny King -- Video Business, 12/17/2008
DEC. 17 |Take-Two Interactive Software said today that its fiscal fourth-quarter loss doubled after selling, marketing, research and development expenses rose faster than sales. Shares of the company, which was expected to have a profit, fell after hours.
The videogame publisher’s net loss for the quarter ended Oct. 31 widened to $15 million, or 20¢ a share, from $7.06 million, or 10¢, a year earlier, as sales increased 11% to $323.4 million, Take-Two said in a statement. The producer of the record-setting Grand Theft Auto games franchise was expected by financial analysts to earn 5¢ a share on $325.8 million in sales.
Take-Two spent 19% of its revenue on sales, marketing, research and development, up from 15% a year earlier, as it prepared to launch such titles as Don King Boxing and Borderlands as well as more GTA installments. The company also said fiscal first-quarter sales would decline between 6% and 27% from a year earlier.
“While our initial guidance provided today is a prudent response to the difficult current and possible future business conditions, we continue to maintain our strategy of developing a select portfolio of AAA titles,” Take-Two CEO Ben Feder said in the statement.
Take-Two shares fell about 18% in extended trading as of about 5 p.m. EST today.
The publisher, whose recent titles include Midnight Club: Los Angeles and NBA 2K9, also announced an agreement with the creative team at its Rockstar Games division, which produces GTA. The deal will extend through January 2012. Take-Two’s GTA IV, which set one-day and first-week all-time records for videogames after its April 29 release, moved more than 10 million copies in its first four months and helped fuel a U.S. videogame industry in which sales through October jumped 25% from a year earlier to $13.1 billion, according to NPD Group.
Take-Two earlier this year was the subject of an acquisition bid from larger competitor Electronic Arts, which first offered about $2 billion for the company in February. EA, which was overtaken as the world’s largest videogames publisher in July when Vivendi’s games unit completed its $9.85 billion acquisition of Activision, allowed its bid to expire in August and ended acquisition talks the following month.
