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Take-Two Interactive Software Management Discusses Q1 2013 Results - Earnings Call Transcript

And now I'll turn the call over to Strauss.

Strauss H. Zelnick

Thanks, Hank. Good afternoon, and thank you for joining us. Our results for the first quarter of fiscal 2013 were below expectations, primarily due to lower-than-anticipated sales of Spec Ops: The Line and Max Payne 3. As a hit-driven entertainment company, not every title that we produce will meet our sales targets. Delivering high-quality products supported by a robust marketing campaign is a recipe for success. However, it's not always a guarantee.

We firmly believe that Take-Two possesses all of the key attributes necessary to navigate through the inherent volatility of our core business over the long term. Our creative teams are among the best in the industry. We've built one of the strongest intellectual property portfolios in the business, including 9 franchises with individual titles that have sold in 5 million or more units. We have cutting-edge development tools and technology, and our strong balance sheet and liquidity provide a strong financial footing.

Today, consumers are increasingly discerning and have an appetite for only the highest quality games that are true leaders within their genre. We believe that their upcoming releases, including Borderlands 2, NBA 2K13, BioShock Infinite and Grand Theft Auto V, among others, will be just that. And our groundbreaking titles are not limited to new releases. Our diverse portfolio of catalog titles, especially Grand Theft Auto IV and Red Dead Redemption continues to attract new audiences years after launch. In fact, sales of both these titles grew in the first quarter versus last year, and our overall catalog sales were up 50%.

In addition to growing our core console and PC business, we're actively investing in digitally delivered content for online and mobile platforms. These emerging areas of interactive entertainment are high growth, not tied to the console cycle and present opportunities to generate more stable, higher-margin revenue streams over time.

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