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Take-Two Interactive's Loss Widens

Updated from 4:46 p.m. EDT

Scalded by "hot coffee," Take-Two Interactive (TTWO) poured some cold water on investors on Tuesday: missing analysts' earnings estimates, lowering its full-year guidance and offering a disappointing outlook for 2006.

While the fiasco involving explicit sex scenes in its latest Grand Theft Auto game tarnished the just-completed quarter, increased costs and delayed products are expected to weigh on coming periods.

Despite the bad news, Take-Two officials touted the company and its future on a conference call.

"We are confident about our position in the industry and in the marketplace," said company CEO Paul Eibeler on the call. "We believe Take-Two's prospects have never been better."

Investors seemed to have a different opinion though. In after-hours trading following Take-Two's earnings release, the company's stock was trading off $1.52, or 6.3%, to $22.64.

And in terms of Take-Two's financial results, things certainly have been better.

In its fiscal third quarter ended July 31, the video-game software company lost $28.8 million, or 41 cents a share. In the same period a year earlier, in contrast, the company lost $14.4 million, or 21 cents a share.

Sales rose 5.6% to $169.9 million.

Analysts polled by Thomson First Call were expecting Take-Two to lose 38 cents a share in the quarter on sales of $175.6 million. Warning that it would not meet previous financial expectations for the quarter, the company in July predicted it would lose 40 to 45 cents a share in the quarter on sales ranging from $160 million to $170 million.

But it's the company's guidance that may prove more troubling to investors, because Take-Two slashed its full-year -- and implied fourth quarter -- outlook. The company now expects to earn 85 to 90 cents a share for the full year on $1.22 billion to $1.27 billion in sales. Previously, the company had predicted it would post earnings ranging from $1.05 to $1.12 a share on sales of $1.26 billion to $1.31 billion.

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