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Take-Two Struggles to Stay in the Game

"That game will dominate Take-Two's story all year," says Brian Sozzi, an analyst with Wall Street Strategies, an independent research firm. "It's going to be huge because it is one of the strongest franchises in the industry, going beyond Guitar Hero and almost on par with Halo."

"Take-Two will probably be fine on the cash side, although I think cash will be tight, and they may have to manage liquidity," says Pachter, the analyst with Wedbush Morgan.

Pachter, who has a sell rating on the stock, says Take-Two doesn't face bankruptcy but the stock is not worth its current price. "The market has valued the contribution from Grand Theft Auto higher than I do," he says.

Shaky Ground

While Grand Theft Auto IV, is expected to give the ailing company a shot of adrenaline, it does show Take-Two's vulnerability as a company reliant on one blockbuster for its revenue.

Because of the delay of the next Grand Theft Auto game, the company's earnings have drifted from $1.37 a share in fiscal 2003 down to 91 cents a share in 2004 and 50 cents a share in 2005. It ended fiscal 2006 with a loss of $2.60. At the end of fiscal 2007, Take-Two is expected to post a loss of $2.06, according to analysts polled by Thomson Financial.

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