Editor's Note: Herb Greenberg's column runs exclusively on RealMoney.com; this is a special free look at his column. For a free trial subscription to RealMoney.com, click here. This article was originally published June 7 on RealMoney.

Fried-Day:

Trouble for Take-Two?

Take-Two

(TTWO) - Get Report

bagged its buddies Thursday when it warned (in not so many words, of course) that third-quarter earnings would be roughly half of what analysts had been expecting. Buddies like Fidelity and Alliance, which are

both

big holders. (Didn't Alliance learn its lesson from

Enron

and

Tyco

(TYC)

?)

The result: Despite management's attempt to put an upward spin on a downward-spiraling story, there was a noticeable absence of "great quarter, guys!" on the conference call. Analysts had expected the software game maker, whose fortunes had been given a lift by sizzling sales of Grand Auto Theft III, to earn 12 cents in the current quarter. Instead, guidance was for 7 cents. The company, which is under formal investigation by the

SEC

, offered no explanation for the lower number.

And, remarkably, when pressed on it during the conference call, CEO Kelly Sumner had no idea how analysts came up with the 12-cent number. (Of course, this is the same company that "privately" told one analyst how much a recent deal with

Sony

(SNE) - Get Report

was worth.

Privately

. Those were the analyst's words, not mine!)

Furthermore, the company hasn't changed its year-end guidance, though it didn't explain how it will make up for the third-quarter shortfall. However, Sumner said the company can move titles from one quarter to the next. "If we have the ability to move products, then we will move products." (What kind of game is

that?

)

The company also dodged questions about how its gross margin could actually

fall

to 37.4% last quarter from 39.2% a year earlier, before charges, when the high-margin publishing part of the business rose to an all-time high. "This is a huge puzzler," says longtime Take-Two skeptic Gary Cooper of Banc of America Securities. "How do you increase total revenue by almost 100% andyour gross margin goes down? It's unfathomable."

What's more unfathomable, says longtime Take-Two short and gadfly Marc Cohodes of Rocker Partners -- whose firm and related entities owned 9.3% of

TheStreet.com Inc.

(TSCM)

, the publisher of this Web site, as of April 11 -- is that "mutual funds and fiduciaries now own a company that is under formal investigation and where numbers again this quarter don't add up and make sense."

"So, I don't want to hear about how nobody sees the next Enron or Tyco coming," says Cohodes. "The people who own this stock should ask themselves why they own a company ... that has admitted selling product to itself."

Ditto for the analysts who bought the story from a company that, regardless of its possible legal issues and its need to restate seven quarters of financial results, has a history of missing estimates!

And these notes: Why is it that Thursday's press release listed year-ago sales as $88.179 million, when the restated 10-Q for the quarter ended April 30, 2001 -- filed with the SEC on April 19, 2002 -- said sales were $88.617 million? The numbers don't add up. How can that be?!

Also, Piper Jaffray analyst Tony Gikas, a longtime Take-Two bull, considers any weakness on this news a buying opportunity. And he had better: His firm's parent, US Bancorp, is loaded with the stock!

Tyco -- in context:

On the

Columnist Conversation yesterday, Tyco bull Bob Marcin said he was "encouraged by" a quote from David Tice analyst Albert Meyer, in a Floyd Norris story in

The New York Times

, in which Meyer said Tyco's accounting was "aggressive and creative but technically correct."

In an email to me yesterday, Meyer (nobody's fool when it comes to numbers) notes that he also told Floyd, back in the Enron days, "that Enron's law firm claimed that Enron's accounting was 'creative and aggressive' but 'no one had reason to believe that it was inappropriate from a technical standpoint.' And that's pretty much what one can say about Tyco's accounting. In other words, far from being encouraging, it's dismal news! This type of accounting leads to the poor house."

Window on Valence:

I've been so swamped I neglected to mention that when

Valence

(VLNC)

released year-end earnings on May 29, the battery company didn't include an income statement or balance sheet. (So

shocking!

) Can't wait to see the surprises

that

10-K holds.

Light the candles, but don't burn down the house!:

Half-century mark for yours truly Saturday. And the fun has only just begun!

Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback and invites you to send any to

Herb Greenberg. Greenberg also writes a monthly column for Fortune.

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Brian Harris and Mark Martinez assisted with the reporting of this column.