The latest news on this front comes via action on the SEC's part. According to a Reuters article, Take-Two's options practices are being formally investigated by regulators. The SEC wants to examine options-backdating data to see how bad the problem was at the publisher. Witnesses can now be called up to testify about exactly what went on and when.
That's the last thing Take-Two needs right now. Erstwhile CEO Ryan A. Brant was convicted in February over backdating issues -- reportedly the first such executive to suffer such a fate. Activist investors, leveraging their nearly 50% ownership of the company, recently took the initiative to get rid of CEO Paul Eibeler and put into place a new board. The new chairman, Strauss Zelnick, and acting CEO Ben Feder, were ready to aggressively clean up the publisher's act and move forward with a plan for emphasizing shareholder value over shenanigans.
Now they'll have to deal with the complication of the probe. The investigation constitutes a significantly negative overhang on the company's stock. Indeed, shareholders right now are probably reticent about checking news feeds over the next several months; if I were invested in Take-Two right now, I know I'd be worried over what nefarious past activities might be lurking around the corner.
Thank goodness I'm not playing the video game zeitgeist with this company; I favor instead the big three in this arena -- Electronic Arts
Take-Two's shares will probably experience a lot of volatility in the coming months. It will be instructive to hear what the new bosses say in terms of strategies going forward; shareholders will want to know exactly how the publisher plans to ride the video game wave besides the carjacking titles, and how it plans on improving earnings results. In the meantime, Wall Street will have to wait and see how Take-Two fares while it is under investigation.
Take a few more Takes on Take-Two:
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