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Updated from 7:58 a.m. EST

Video-game publisher

Take-Two Interactive

(TTWO) - Get Take-Two Interactive Software, Inc. Report

posted a jump in quarterly sales and earnings, as copies of its latest

Grand Theft Auto

game flew off shelves during the holidays.

The company also raised financial targets for the fiscal year.

The performance of the nation's third-largest game publisher helped ease some jitters among investors about the game industry, after several smaller competitors had warned about earnings for 2003.

"The industry is doing OK," said Michael Wallace, a games analyst at UBS Warburg. "EA

Electronic Arts and Take-Two did a lot better. The industry is still growing."

Take-Two earned $50.5 million, or $1.20 a share, in its fiscal first quarter, compared with $34.8 million, or 92 cents a share, in the year-ago period. The results included a $7.4 million expense ($5.4 million of which was noncash), due to the company's consolidating three distribution centers into one.

Sales jumped 45% to $408.8 million from $282.93 in the same period a year ago.

The New York City-based publisher beat Wall Street earnings expectations of $1.16 a share and sales of $359.19 million, according to a poll of analysts by Thomson Financial/First Call.

The firm hired

THQ

TheStreet Recommends

(THQI)

official Jeffrey Lapin in the quarter for its chief executive spot, which some analysts said could signal a strategic move for company, as it begins to expand into children's games. Take-Two has an upcoming game tied to

Disney's

(DIS) - Get Walt Disney Company Report

Piglets

movie. Until now, the company's best-selling games have been geared toward adults.

"The industry-wide supply of games grew faster than demand

at the end of last year," said Take-Two's Lapin, adding that "this short-term supply demand imbalance will dissipate in the next several months."

The company's latest

Grand Theft Auto

game,

Vice City

, slipped to the second most popular spot for the PlayStation 2 console in January, but still posted strong sales. The game contributed 68% of the company's total revenue, which elicited some concern from Wall Street analysts about the company's possible over-reliance on the

Grand Theft Auto

franchise.

"The reason why

Take-Two stock isn't up more is the question: How do you grow over and above

sales of Grand Theft Auto?" said UBS Warburg's Wallace.

Take-Two executives downplayed concerns on a morning conference call, saying that the company's Rockstar Games division, which developed

Grand Theft Auto

, is currently working on 11 new titles, including another sequel to the hit. Also among the titles is a game based on the 1979 cult film

The Warriors

.

"There's a lot more in our pipeline than we talk about," Take-Two's Lapin added.

Looking ahead, the company expects to earn $2.26 a share for the full year, up from an earlier forecast of $2.20, on sales of $970 million, up from an estimate of $950 million. The company reiterated guidance for the second quarter of earnings per share of 34 cents on sales of $190 million. Executives said they expect the entire industry to expand 15% to 20% in the current year.

Take-Two shares were up 70 cents, or 3.6%, at $20 in morning trading.