Take-Two Trading Resumes, Price Falls

Shares of Take-Two TTWOfell 9% Friday as the stock opened for the first time since trading was halted on Jan. 22.

Take-Two fell $1.69, or 9.1%, to $16.87 Friday morning, recovering from an initial drop of 24%. The stock was halted at $18.56 three weeks ago after the company postponed the release of its fourth-quarter results, saying it needed more time to restate past results.

"It's only down a buck, and that's pretty surprising," said Shawn Milne, a senior analyst at SoundView Technology, who has a hold rating on the stock. "In this day and age, I find it hard to believe that anyone would want to step up and own this stock."

The video game publisher issued its quarterly results on Wednesday and restated seven quarters. The restatements eliminated sales of products that were recognized as revenue and later returned or purchased by the company in subsequent periods. The company also announced that its chief financial officer?the second in about two months?had resigned.

Milne said hedge funds might be attracted to the stock because the company's games have been selling extremely well recently. Take-Two's stock has soared 165% since Oct. 1 as its video game Grand Theft Auto III became the best-selling title in the U.S. The product has been criticized for its violent content and has been banned in Australia.

"Anyone buying this is assuming that the worst is over, but that's a hard assumption to make," Milne said. "They still have the same management team that led them into this."

Milne believes the firm's accounting issues will be hard to resolve, and he said that if the popularity of the games begins to wane, "there isn't a lot supporting the company." Take Two appears to have few liquidity problems right now, having paid down its debt, but Milne said that if another shoe were to drop, "I have to believe the stock would be cut in half from there."