Loss Widens at Take-Two Interactive

Updated from June 8

Grand Theft Auto publisher Take-Two Interactive (TTWO Quote) got mugged in Friday's market after reporting a quarter that gushed red ink.

Before the session, Wall Street analysts reacted to companies' earnings report Thursday night with a couple of downgrades. Even those analysts that remain bullish on Take-Two's shares lowered their price targets for the company's stock.

"We think investors should be selling shares of Take-Two this morning," said Citigroup analyst Elizabeth Osur in a note issued Friday morning in which she downgraded the company's stock to a sell from a buy. "A [second-quarter] disappointment, product delays and product cancellations translate to our view that TTWO deserves a lower multiple," added Osur, whose firm has not done recent investment banking business for Take-Two.

Investors appeared to follow the advice or Osur and her fellow sell-siders. In recent trading, Take-Two shares were off $2.48, or 14.8%, to $14.29. Earlier in the session they were off as much as 16%.

Take-Two disappointed investors and analysts by not only posting a much wider than expected loss -- excluding a one-time charge, the company lost about 36 cents a share more than analysts had predicted -- but also by declining for the second quarter in a row to give a specific financial forecast for coming quarters.

On a conference call Thursday night, company executives explained that they were having a difficult time determining a forecast due to a tough market environment. Amid the introduction of new video game hardware, software publishers have been seeing soft sales of games for older consoles in recent quarters at the same time that they've seen rising development costs.

"We do share your frustration" that the company isn't providing an outlook for coming quarters, Take-Two CEO Paul Eibeler told American Technology Research analyst P.J. McNealy on a conference call Thursday following the earnings announcement. "But there's a lot of uncertainty in the marketplace right now."