Take-Two Dips as Revenue Mix Is a Concern

Take-Two Interactive Software ( TTWO) posted higher second-quarter profits, beating analysts' estimates by a penny, and forecast a 25% rise in 2003 earnings.

In the quarter ended April 30, the company earned $15.2 million, or 36 cents a share, compared with $9.6 million, or 25 cents a share, in the same quarter last year. Analysts were expecting 35 cents a share.

Sales were $194.2 million, up 14% from last year's $170.3 million. "Top-selling products from our world-renowned Rockstar Games label once again drove our publishing revenue," said Jeffrey Lapin, chief executive.

Still, Take-Two's shares were down $1.25, or 5%, in premarket trading to $25. Arvind Bhatia, an analyst at Southwest Securities, said the company's mix of revenue results is causing the stock to sag. "The company had less revenue in its publishing business than expected," he said. Publishing revenue represented 65% of total sales, compared with 79% in last year's quarter.

New York-based Take-Two issued third-quarter guidance of 16 cents a share on sales of $116 million. The company also raised its full-year 2003 guidance to $2.28 a share on revenue of $975 million. Both earnings forecasts match analysts' consensus estimates. Analysts, however, expect $145 million in revenue in the third quarter and $981 million for the year.

The company earned 12 cents a share in the third quarter last year and $1.83 a share for the year.

Meanwhile, fellow computer game maker 3DO ( THDO) said Wednesday it had filed a voluntary Chapter 11 bankruptcy petition and said it is trying to sell itself as a whole or in parts.

The company prefaced the move in a May 13 press release in which it said it was having trouble raising money and would cut 50 employees. It narrowly skirted a Nasdaq delisting in February when its shareholder equity slipped below $10 million. As of Dec. 31, assets were $29.3 million, down from $44.9 million at the end of fiscal 2002.

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