Take-Two and Go Away

The serial disappointers at Take-Two Interactive (NASDAQ:TTWO) can't even get their flagship brand right. The video-game software developer lowered its fiscal 2007 guidance after bumping its highly anticipated Grand Theft Auto IV game out of the holiday season. Now the title won't be hitting stores until as late as April of next year.

There was a lot riding on this game. Grand Theft Auto is the company's biggest franchise. It even had Microsoft (NASDAQ:MSFT) on board, forking over $50 million for a pair of episodic add-ons to the game exclusively for Xbox 360 users. Microsoft appears to be willing to play along with the delay, though one has to wonder whether the move may also hurt Xbox 360 sales this Christmas.

After the company pulled its Manhunt 2 game release when it ran into several ratings-board hang-ups globally, investors were counting on GTA4 to be a big hit leading up to the crucial holiday selling season. Now it's not going to happen. The company claims that bumping the game back two quarters is "due to additional development time required to complete the title," but that probably means that Take-Two is trying to clean up the game so it doesn't suffer another Manhunt 2 fiasco.

Take-Two won't leave the stockings empty, though. It will still be releasing the latest installment in its Elder Scrolls franchise in its fiscal fourth quarter, which ends in October. It also has a few Wii games and 2K sports titles coming out. Still, this is a bumbling company that needed to deliver on its marquee property instead of leaving its shareholders standing in a daze, like some of the carjacking victims pulled out of their cars in the game itself. 

The company is now looking to post a charge-laden loss per share of $2.10 to $2.20, with revenue clocking in between $950 million and $1 billion. You know things are bad when the laundry list of one-time charges includes not only restructuring initiatives, backdated-option investigations, and legal fees tied to subpoena responses, but also "expenses related to unusual legal matters."

Is this a video game publisher, or the Keystone Cops reborn as video game developers?

Naturally, Take-Two's loss is everyone else's gain. Rival publishers such as Electronic Arts (NASDAQ:ERTS), Activision (NASDAQ:ATVI), Atari (NASDAQ:ATAR), and THQ (NASDAQ:THQI) won't have to worry about the 800-pound GTA4 gorilla crowding the GameStop (NYSE:GME) floor. It makes a difference. Even if a developer isn't putting out a similar title, that's an extra $50-$60 that will probably go to a different game.   

In the end, the shorts win another round in this sad saga. I had singled out the company earlier this week as a potential buying opportunity, given the nearly 26 million shares sold short. A short squeeze could really ignite shares higher in a hurry. Unfortunately, you need good news to light that kind of bottle rocket. The only thing that Take-Two doesn't seem to be postponing these days is a deluge of more bad news.

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Longtime Fool contributor Rick Munarriz has played a few of the Grand Theft Auto games, though he's never been much of a carjacker. He does not own shares in any of the companies in this story. He is also part of theRule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.