After a series of setbacks, Take-Two Interactive Software (NASDAQ:TTWO) finally sent some positive vibes this week, when it confirmed the October 2004 release of the next Grand Theft Auto for Sony's (NYSE:SNE) PlayStation 2. It's too bad the good times didn't make it to the weekend, however.

Today, the video game publisher reported first-quarter profits down 38% year over year to $31.8 million, or $0.70 per share, meeting lowered guidance. Though management cited tough comps due to last year's release of mega-blockbuster Grand Theft Auto: Vice City, sales declined a fairly modest 8% to $375.5 million.

And let's face it, tough comps aren't to blame here. Back in December, Take-Two expected revenues to climb slightly on the strength of highly rated new releases Max Payne 2 and Manhunt, as well as a Grand Theft Auto double pack that brought GTA to the Microsoft (NASDAQ:MSFT) Xbox. Some of those sales simply haven't materialized -- but we already knew that.

Take-Two also lowered its second-quarter forecast by six cents to $0.33 per share, after pushing the PS2 and PC releases of Grand Theft Auto: Vice City in Japan into the third quarter. The company insists that this does not alter its full-year earnings outlook, which it reiterated at $2.45 per share.

Believe it or not, Take-Two really isn't in such bad shape. Not only does the stock trade at a relatively modest 14 times 2004 earnings, but while many knock the company as a one-trick pony, I just don't think that's the case.

You'll recall that, back in November, I didn't doubt that Motley Fool Stock Advisor selection Activision's (NASDAQ:ATVI) True Crime would be a blockbuster. Yet, True Crime is, at best, very good -- not great. Take-Two's Manhunt, on the other hand, while too gory and creepy to be a true blockbuster, is a great game, as are many of Take-Two's titles, including Max Payne and Midnight Club.

Yes, it has disappointed on the earnings front. For all that, my gut feeling is that once it gets past its accounting issues with the SEC, the quality of its games will make Take-Two worth watching.

Give us your take on the Take-Two discussion board -- only at Fool contributor Jeff Hwang owns none of the aforementioned companies, but does own copies of Grand Theft Auto: Vice City, Max Payne 2, Manhunt, and True Crime.