Take-Two Interactive (NASDAQ:TTWO) unfortunately needs to keep us waiting for its full earnings report. Instead, the software publisher issued only a bare-bones, preliminary, audit-free missive to Wall Street. And it wasn't a terribly happy one, at that.

Take-Two took in $308 million in sales revenue and $0.27 in diluted net profits per share for the fiscal fourth quarter ended Oct. 31, 2005. This compares to revenues of $438 million and net profits of $1.36 per share in the year-ago timeframe. For the full fiscal year, Take-Two said it grossed $1.2 billion in sales revenue and achieved net income of $0.53 per share, vs. a revenue base of $1.1 billion and a net income base of $1.43 per share for the year ended Oct. 31, 2004.

The decreases are depressing, as is the current outlook. Though Take-Two isn't providing formal guidance for fiscal 2006, it now expects results to be a lot less than analysts (and its own estimates) previously predicted.

The publisher's struggles are no surprise. Take-Two ran into trouble last summer with a controversy over its Grand Theft Auto: San Andreas video game. Hackers uncovered blatant sexual content hidden in the code, which led major retailers to pull the title from their shelves. Considering that Take-Two's value is largely defined by the Grand Theft Auto franchise, it didn't take a whole lot of prognostication to figure that this would be a challenging time for the publisher.

Of course, there were other factors leading to this preliminary earnings decline. In fairness to Take-Two, the ongoing video game sales slump brought on by the imminent arrival of new consoles -- in addition to the new, hard-to-find Xbox 360 from Motley Fool Inside Value pick Microsoft (NASDAQ:MSFT) -- is also dogging major players like Activision (NASDAQ:ATVI) and Electronic Arts (NASDAQ:ERTS). In addition, Jeff Hwang reported on EA's exclusive deal with the NFL back in December 2004, which cost Take-Two an opportunity to grow its sports identity and branch out from its Grand Theft Auto rep.

Here's how investors should look at the situation. You've got a sales slump knocking down prices on video game stocks; it's real, and it's disconcerting. Yet we all know that in the long term, video games should be a profitable investment. They aren't going away, and publishers are aggressively pursuing casual users' entertainment dollars. In addition, adding an advertising model within the games themselves should help to provide a good counterbalance to increasing development costs. Online usage is increasing, and even your grandmother might actually be navigating the deep forests of the latest Zelda game herself.

For the individual investor who wants her portfolio associated with one of the major players, buying on the dips and holding patiently, EA or Activision would be great ideas. So might THQ (NASDAQ:THQI), which has a nice licensing model, particularly with its Nickelodeon games.

As for Take-Two, I'm not inclined to invest in it right now. The product slates and brand equity of EA et al. are more attractive to this Fool. Take-Two will certainly recover over time, but I currently like the risk/reward proposition offered by the makers of Madden and Pitfall as opposed to the home of Grand Theft Auto.

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Fool contributor Steven Mallas holds no financial position in any of the companies mentioned. The Fool has a disclosure policy.