Everyone knew that last year's success of Grand Theft Auto IV would be a hard act to follow for Take-Two Interactive (NASDAQ:TTWO). It fishtailed into the record books as the fastest selling game of all-time last April. Only the skidmarks remain.

Last night's fiscal second-quarter report was supposed to be a dud. Last year's blowout profit of $1.29 a share for the quarter that ended in April? It's been washed away on a trailing basis, with a small loss this time around. Last year's heady net revenue of $539.8 million? Toast! It fell by 57% to $229.7 million this past quarter.

As bad as it seems, analysts actually expected the video game company to do even worse. After all, consider the company's biggest sellers during the period:

  • The Lost and Damned, the first episodic installment to Grand Theft Auto IV, but available only on Microsoft's (NASDAQ:MSFT) Xbox 360 via a digital download.
  • Major League Baseball 2K9, a worthy entry in one of the few pro sports categories not dominated by Electronic Arts (NASDAQ:ERTS).
  • Grand Theft Auto IV, proving that last year's smash still has some gas in the tank (though it's probably closer to running on fumes at this point).
  • And lastly, Grand Theft Auto: Chinatown Wars for Nintendo's (OTC BB: NTDOY.PK) DS. Really? A violent M-rated game on a kid-friendly portable platform? Of course, it only did marginally well.

The current quarter won't get any prettier. Take-Two expects a steep sequential drop in revenue and an even wider deficit. When you only have a pair of titles on the release slate -- Birthday Party Bash for Nintendo's Wii and The BIGS 2 baseball simulation -- you may as well tap the snooze bar and wake up three months later.

Thankfully, Take-Two is closing out its fiscal year strongly. The highly anticipated BioShock 2 and the second GTA4 episodic installment for Xbox Live users are leading the way. The final quarter should be so strong that Take-Two expects to earn more in the fourth quarter than it lost during the first three periods.

Take-Two's guidance calls for at least breakeven results this fiscal year, with the possibility of earning as much as $0.20 a share. Analysts are targeting a profit of $0.12 a share, so Take-Two is still in the ballpark (no MLB 2K9 pun intended). Take-Two's projections are reasonable, especially since it's bumping two releases -- Mafia II and Red Dead Redemption -- into fiscal 2010.

Was Take-Two wrong to refuse EA's buyout offer of $25.74 a share last year? You bet, given the lackluster financials we  now observe. Should growth investors who want a little more predictability consider larger rival Activision Blizzard (NASDAQ:ATVI), a company with a steadier pipeline and expectations of bottom-line growth this year? Absolutely.

However, Take-Two's stock has already been slammed into the single digits. The prospects are decent for a healthy holiday push here. And -- hey -- who's to say that an exposed EA, or even Viacom (NYSE:VIA), won't try to get in ahead of the fourth-quarter rebound with a friendly buyout bid in the mid-teens?

I guess that's the good thing about being a hard act to follow. A year from now, we'll be talking about how 2009's results make for especially easy comparisons.

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