Looks like Take-Two Interactive
Take-Two hasn't experienced the best of times the last few years. To begin with, it was swept up in the wave of options scandals that has haunted many businesses on Wall Street. Take-Two also stumbled when it was discovered that X-rated content could be unlocked on one of its Grand Theft Auto titles. Its latest earnings reports were nothing to write home about; in addition, quarterly releases were delayed because of financial reviews, and restatements of fundamentals have spooked investors.
And then there is that intrinsic stigma to Take-Two's situation -- its prospects are based on basically one franchise, the aforementioned Grand Theft Auto. Even though the company is aiming to get rid of that image through sports titles and new games such as Bully, you can still hear the whispering taunts of investors who prefer publishers who have better licensing strategies, the three big examples being Activision
Activist investors have had enough. Powerful players such as OppenheimerFunds and SAC Capital Partners are throwing their weight around, engaging in an energetic proxy fight to force Take-Two's current management out. This has led to speculation as to who would make for a great new owner. The situation reminds me of Quaker Oats and Gatorade several years ago -- PepsiCo bought Quaker Oats arguably just for that sports drink. Take-Two will be looked at for one very valuable asset. So, who should make an offer?
Any publisher would benefit from an association with Grand Theft Auto. Even so, I don't necessarily see THQ begging to get in this game -- it's doing well enough with its strategy of licensing Viacom
So what should individual investors make of all this? Take-Two's future is extremely speculative -- this situation is nothing more than a bet right now. In my opinion, I wouldn't want to expose my portfolio to the potentially increasing volatility of Take-Two's shares. As public and private equity groups look at how compelling this case is, it becomes difficult to see exactly where all this talk will lead -- entering into the stock now would be exciting, certainly. As for me, I've been bearish on Take-Two, and I see no reason for taking a gamble as to whether the company will be sold and guessing what price it could ultimately fetch.
Want more Takes on Take-Two? Take a look at these articles:
- Fool on Call: Bling-Bling for Take-Two
- Still Bearish on "Bully" Maker
- Take-Two and Call Me in the Mourning
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