Shortly before I sat down to write this article, a friend of mine was heaping copious amounts of praise on Take-Two Interactive's (NASDAQ:TTWO) BioShock game. Although he had so far only downloaded the demo for his Microsoft (NASDAQ:MSFT) Xbox 360 unit, it didn't take a lot of intelligence to see that he'd eventually be buying the full sci-fi adventure.

I've been pretty bearish about Take-Two lately, but with the incredible publicity surrounding this title, should investors start to take the company more seriously as an investment idea? Take-Two stated that it has shipped 1.5 million copies of BioShock -- and although there are surely some early holiday shoppers out there, we aren't even close to the height of the Christmas selling season.

That's not bad, and looking at the third-quarter data, I see that Take-Two has reduced the red ink by 37%. Furthermore, Wall Street expectations were beaten; adjusting for restructuring and legal fees, the publisher was expected to lose $0.67 per share; Take-Two actually took the loss down to $0.64 per share. Take that, Mr. Market!

Looking at the guidance, Take-Two thinks it can do between $0.80 and $1 per share in fiscal 2008. On an adjusted basis, that would come out to between $1.30 per share and $1.50 per share.

Indeed, Take-Two is trying to move on from its recent scandal-mired past and become a more respectable competitor in its industry. It's also trying to deepen its product portfolio, so it can be perceived as a player on par with the likes of Activision (NASDAQ:ATVI), Electronic Arts (NASDAQ:ERTS), and THQ (NASDAQ:THQI). In fact, Take-Two formed a casual gaming label called 2K Play that will license some of Viacom's (NYSE:VIA) Nickelodeon characters. Don't worry, THQ shareholders, SpongeBob wasn't listed; instead, Take-Two will be working with Dora the Explorer and Go, Diego, Go!

Take Two's current games, like The BIGS and The Darkness, led third-quarter sales. Another recent Take-Two release -- Carnival Games for the Nintendo (OTC BB: NTDOY.PK) Wii -- was internally developed and therefore wholly owned by the company. (I haven't played it, but it looks pretty cool.) The pipeline for the rest of the fiscal year has six games, including Manhunt 2, which was previously delayed based on its Adults Only rating.

I like these developments, and I concede that Grand Theft Auto IV, while it has been delayed, is nevertheless getting closer and closer. I'm still bearish on the company, but considering the current guidance and this BioShock success, I'm getting a better feel for the concept of a rebound. So, while I'm not buying yet, I will soften my stance a little and say that this is one for the watch list, at least. I'll be very interested to see what Take-Two's new management team says in the next quarterly report about its prospects going forward.

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Fool contributor Steven Mallas owns shares of Activision and Nintendo. As of this writing, he was ranked 6,944 out of more than 65,000 investors in the CAPS system. Don't know what CAPS is? Check it out. The Fool has a disclosure policy.