On second thought, Take-Two Interactive
Take-Two delivered a sluggish end to what started out as a stunning fiscal year, and then made things worse by thoroughly hosing down its prospects for fiscal 2009.
Revenue climbed 11% to $323.4 million in its fiscal fourth quarter. The reported deficit doubled to $0.20 a share, but several legal charges and a business reorganization hit are baked into those numbers. Strip those out, along with stock-based compensation, and one arrives at earnings on a non-GAAP basis of $0.02 a share for the quarter and $2.08 a share for all of fiscal 2008.
Grand Theft Auto IV was the company's blockbuster title this year, though recent leaders in its release library include Midnight Club: Los Angeles, the NBA 2K9 basketball game that has given EA Sports some worthy competition, and additions to the Carnival Games franchise that have sold briskly on Nintendo's (OTC BB: NTDOY.PK) Wii.
Now let's bite down hard on the bullet, because fiscal 2009 won't be pretty. Take-Two sees revenue falling by 19% to 28% this new fiscal year, with non-GAAP profits clocking in between breakeven and $0.20 a share.
Wall Street figured that 2009 would be a challenge for the company, given the 2008 success of GTA4. The pros just never figured it would be this bad. Analysts were only looking for a 10% top line swoon, with projected profitability at a now laughable target of $1.26 a share.
Releases on the company's 2009 slate showcase the industry's gradual shift to digital distribution. A pair of GTA4 episodes will be available exclusively as downloads on Microsoft's
If you keep putting in bigger hard drives, console makers and companies like Take-Two will find ways to fill them up.
Take-Two is certainly not the first gaming company to spook investors. EA and THQ
That should give the industry hope.
Other games to play:
Electronic Arts, Nintendo, and Activision Blizzard are Motley Fool Stock Advisor recommendations. Take-Two is a Rule Breakers newsletter picks. Microsoft has been singled out in Inside Value. Play along with any of the premium newsletters for the next 30 days with a free backstage pass.
Longtime Fool contributor Rick Munarriz will admit to still playing video games, though finding time is the rub. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.