Take-Two Brass Flagged for Delay of Game
08/03/07 - 04:22 PM EDT
Priya Ganapati
Video-game publisher Take-Two's(TTWO Quote - Cramer on TTWO - Stock Picks) new management has stumbled badly.
Thursday's announcement to delay the company's biggest game of the year, Grand Theft Auto IV, in addition to the rating problems around another title, Manhunt 2 and ongoing inefficiency in the way it develops games has dampened investor optimism over the new team. In March, when Take-Two's largest shareholders ousted the company's CEO, Paul Eibeler, and the board of directors, shares soared more than 15%, touching a high of $24.80. The new team, which comprised Chairman Strauss Zelnick, CEO Ben Feder and a revamped board of directors, inspired shareholder hoped for a turnaround at a company plagued by scandals and accounting-related problems. But those problems run deep, and though five months of new executives at the helm may be too soon to judge, so far, there's been no meaningful change or value for shareholders. Take-Two shares, trading nearly 45% off their 52-week high, plunged 16.3% to $14.16 Friday. Though Take-Two's recent fall could be viewed as a buying opportunity, the bigger question is whether the company can deliver consistently and on schedule. As of now, that's a no. The pushback of Grand Theft Auto IV's release from October to April 2008 took the wind out of Take-Two's guidance for the fourth quarter and fiscal year 2007. For the fourth quarter, Take-Two forecast revenue in the range of $275 million to $300 million, way below analysts' forecast of $535.2 million in sales.
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