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Take-Two Takes a Tumble

Shares plunge after hours following the video-game maker's bleak earnings outlook.

Updated from 4:36 p.m. EST

Slow sales of video games in the crucial holiday season shot down the fourth quarter for

Take-Two Interactive

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, which saw its earnings per share plunge by 70% and sales drop by nearly 30% compared with the same quarter last year.

The company said it will significantly undershoot its targets for the first quarter and the entire fiscal year, as the industry awaits the impact of new game consoles by


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, in addition to


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recently released Xbox 360.

Take-Two shares slumped $1.50, or 8%, in after-hours trading to $16.97 on Instinet.

Take-Two reported a fiscal fourth-quarter profit of 27 cents a share, 3 cents less than Wall Street expected, on sales of $308 million, better than the $295 million forecast by analysts. A year ago, the company posted a profit of 91 cents a share on sales of $438 million. The company called the results "preliminary" and said they had not yet been audited because of extra work entailed by compliance with the Sarbanes-Oxley Act. It did not give a figure for the quarter's net income.

Guidance for the first-quarter was especially weak; the company now expects an unspecified loss per share on sales ranging from $230 million to $250 million. The First Call consensus was a profit of 7 cents a share on sales of $317 million.

For the full year, the company reported a profit of 53 cents per share, a penny below expectations, and net sales of $1.2 billion, in line with expectations. Take-Two did not give specific guidance for the year, but said net revenue and earnings per share will be significantly below earlier guidance and the consensus of analysts.

In a conference call, CEO Paul Eibeler said "clearly the holiday season did not live up to anyone's expectations," and he blamed the poor quarter on a number of factors, including difficult comparison to last year when the company soared on sales of

Grand Theft Auto: San Andreas

. He also said a shortage of Xbox consoles hurt the quarter, as did the hesitance of the public to buy games while consumers are still evaluating new game platforms.

Take-Two also said that Gary Lewis resigned as global chief operating officer to "relocate back to Europe." The company has initiated a search for his successor.

One of Take-Two's major competitors also gave investor reason to worry last month;

Electronic Arts


warned that its sales and earnings in the holiday quarter -- the most important of the year for the video-game industry -- will be "well below" its own previous outlook and the Street's expectations. And video game-software

sales plunged 18% in November, marking the third-straight month of weak sales.