Take-Two Lives Up to Its Name

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Why can't Take-Two Interactive (Nasdaq: TTWO) get things right the first time?

Why can't it stick to its original guidance? Why can't it meet the original ship dates for pivotal game releases? And why, oh why, couldn't it have accepted when Electronic Arts (Nasdaq: ERTS) made a buyout offer for $25.74 a share?

Take-Two is taking a fire hose to its fiscal year outlook, partly because it just delayed its highly anticipated BioShock 2 game until fiscal 2010.

Things have deteriorated quickly for the spunky software publisher behind the monster Grand Theft Auto series. Less than two months ago, Take-Two figured it would at least break even this year, on a non-GAAP basis. Now the serial disappointer is projecting a sharp loss, between $0.80 a share and $0.95 a share.

Release delays happen often in the industry, but they seem to happen to Take-Two more often than most. Mafia II and Red Dead Redemption also got bumped in fiscal 2010 during May's quarterly report. Delays would normally seem like a zero sum game to shareholders, since subtractions in fiscal 2009 become additions in fiscal 2010, but you know the drill by now. Take-Two will probably be delaying games next year, too.

This is a tough time for the industry. Comps finally began to fall at specialty retailer GameStop (NYSE: GME), and even shares of market leader Activision Blizzard (Nasdaq: ATVI) are showing fatigue. Despite the recent months of rallying equities, Activision Blizzard is trading closer to its 52-week low than its 52-week high.

In short, Take-Two is getting hit from both sides. Internal delays and lackluster releases are eating away at it from the inside. Penny-pinching gamers in a tough economy are gnawing away from the outside.

Pessimism, sadly enough, is about the only thing that Take-Two hasn't been able to delay these days.

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Electronic Arts, GameStop, and Activision Blizzard are Motley Fool Stock Advisor recommendations. Take-Two is a Rule Breakers newsletter picks. Play along with any of the premium newsletters for the next 30 days with a free backstage pass.

Longtime Fool contributor Rick Munarriz will admit to still playing video games, though finding time is the rub. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Comments from our Foolish Readers

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  • Report this Comment On July 14, 2009, at 9:18 PM, MichiganJFrog wrote:

    I find it funny that this site lists its content as "spin free" when the spin of this article is obviously that of an obviously ignorant person.

    You act like pushing back games is a bad thing. Any developer can just rush garbage out, but it takes a company with some balls to really keep things back, regardless of what pin head investors (who know barely anything about the game industry, to the point where they pay $100 bucks an hour to talk to Gamestop managers about gaming trends) might think. Also, the fall quarter tends to be overrun with titles and many of them end up choking under the weight of the very breadth of games available. So any delay to the earlier part of the year is seen as a god send from gamers that want to enjoy it all, but just don't have the money to, especially in this economy.

    Like Shigeru Miyamoto always says, a good game is only delayed until it comes out, when a bad game is bad forever. Games right now are tanking even with a certain level of polish, so you have to figure that a company doesn't want to A: release too many high profile games in a quarter and B: release a damn thing that isn't as good as it can be.

    I remember the year when Ubisoft released Prince of Persia, Beyond Good and Evil, XIII and Rainbow Six 3. Beyond Good and Evil and XIII got lost in the flood and tanked. I bought BG&E that spring... for 10 dollars. PoP didn't sell as well as they wanted initially. And that was in a year where the Economy wasn't tanking.

    You also ignore the fact that Take Two is shipping quite a bit this year. Right now Borderlands is scheduled for a fall release. Also with the yearly baseball games (MLB 2K and the surprise Bigs 2) and the yearly basketball games, they are keeping on point. Then you have Rockstar which shipped the best rated DS title ever that has moved at least 160K in the first 2 months at retail. You also have the Lost and Damned and the upcoming Ballad of Gay Tony which will also be bundled on a disc as well. On top of that Chinatown wars is releasing for the PSP along with Beaterator. All in all it is a pretty full schedule if you ask me.

    You sound like a person that doesn't know jack about the game industry that you so choose to write about. Many companies are moving titles from the end of the year into the early months of 2010 and it's not because of failure to do anything, it is because of strategic releases and giving games the time to shine. Other companies aren't even being so ambitious to announce dates for the fall and are just skipping to next year already (as seen by a large amount of E3s heavy hitters).

    Pessimism isn't the only way to sound intelligent on the internet.

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