It pays to be bad.

Take-Two Interactive (NASDAQ:TTWO) turned in a blowout quarter, fueled by its record-breaking smash hit video game Grand Theft Auto IV. Revenue soared 163% to $539.8 million during its fiscal second quarter, and earnings recovered from a loss in last year's second quarter to a gain of $1.29 a share. On an adjusted basis, Take-Two earned a whopping $1.52 a share before stock-based compensation, business reorganization costs, and expenses -- all while it was busy swatting away Electronic Arts' (NASDAQ:ERTS) amorous advances. Analysts were expecting an adjusted profit of just $1.12 a share on $498.9 million in revenue.

GTA4 has lived up to the hype. The title sold 6 million copies during its first week on the market, and it's still selling briskly. Through the end of May, Take-Two has shipped more than 11 million copies to retailers.

Take-Two is realistic. though. It knows that this past quarter was special. In raising its guidance for all of fiscal 2008 to a range of $1.65 to $1.85 a share in adjusted earnings on $1.4 billion to $1.5 billion in revenue, it isn't expecting a whole lot more than it generated during the quarter that ended in April.

However, who is EA kidding with that ridiculous $25.74-per-share offer? Even if it locks up the FTC's blessing, does it really think the hot developer with the best-selling video game of all time will go out for 14 to 16 times this year's earnings? Is it any wonder why EA has collected only 8% of the outstanding shares with that kind of lowball offer?

EA itself is trading at 31 times Wall Street's recently reduced profit target. THQ (NASDAQ:THQI) and Activision (NASDAQ:ATVI) trade at current-year multiples of 22 and 26, respectively. Even niche retailer GameStop (NYSE:GME) is fetching 20 times this year's projected bottom line.

I'm not suggesting that Take-Two can't be had. But it will need to be had at a fair price.

Take-Two isn't perfect. It's going to post a loss in its 2k sporting-games business, and the episodic installments to GTA4 that it will deliver exclusively to Microsoft (NASDAQ:MSFT) for its Xbox diehard gamers won't be out until fiscal 2009. But Take-Two also has other potential hits in the pipeline, including a sequel to last year's sleeper hit BioShock, which has moved 2.2 million copies since last summer.

Here's hoping EA stops wasting everybody's time and either bows out of this laughable buyout or comes back with an offer that Take-Two can't afford to refuse. As things stand, Take-Two will be just fine as it shakes its head as the industry's bad boy.

Yes, it pays to be bad, but only when you're really good at it -- the way Take-Two is.

More Foolishness:

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.