Game software publisher

Take-Two Interactive

(TTWO) - Get Report

gave the street anupside surprise and a net profit for its second quarter, but scaled backguidance on the current quarter, sending shares plunging in after-markettrading activity.

Hit sellers such as its

Grand Theft Auto 3

helped the New YorkCity gamemaker post second-quarter earnings of $9.6 million, earnings of 25 cents per share on revenue of $170 million, compared with a loss of $11.4 million,or a loss of 35 cents on revenues of $88.2 million in the same period lastyear.

Excluding a $1.5 million pretax charge related to a class-action suitsettlement and a $32,000 pretax gain on Internet investments, pro formanet income for the quarter was 27 cents earnings per share, or $10.5 million.

Excludinglosses on Internet assets and investments, pro forma net income for thesecond quarter for last year would have been 13 cents a diluted share, or$4.3 million.

Take Two raised its fiscal 2002 guidance to $1.68 of diluted netincome per share, on sales of $733 million. But it was the company'sreductions on guidance that the market focused on. Take Two said it plansto miss consensus on the current quarter, expecting 7 cents a share earnings per share, onsales of $100 million. The analyst consensus for the current quarter is 12cents a share.

The company also said it settled a class action shareholder suit, agreeing to pay $7.5 million, pending court approval. Thesuit was filed after shareholders complained that the stock was restrained from trading for about three weeks due to the company's restatement of 2001income.

Take Two closed the day down 59 cents, or 2.3% to $25.50. But jitteryinvestors, who spent the day fretting about the ongoing value erosion amongthe tech sector at large, were nonplussed at the current quarter's surprise,sending shares plummeting after the markets closed, down another $3.40, or13.3% to $22.10.

Hair-trigger investors have sent video game stocks see-sawing thisweek, most recently setting its targets at

Activision

(ATVI) - Get Report

. Activision stockgot a 7.2% boost on Tuesday after raising its guidance. It saw those gains erased by Wednesday after investors woke up to a surprise pressrelease announcing a 7.5 million share stock offering.

Activision shares closed the day down $2.42, or 7.5% on fears that the offeringwould dilute share value.to $29.67. But it got dragged down another $1.32, or 4.5% to $28.35 inafter-hours activity.