Take-Two Interactive Software
So if everything is so great, how come I'm thinking about selling my Take-Two stock on the news?
First, let's run through the numbers. Sales grew 54% year over year to $268 million, thanks to a nice catalog of action games and sporting franchises. GAAP earnings landed at $0.20 per share, up from a $0.13 loss per share a year ago. So far, so good; nobody expects video game publishers to make much money in the spring and summer months.
What leaves me hollow is not the numbers, but the desperation I sense behind Take-Two's communications. Sure, Red Dead: Redemption is a great game by all accounts and will sell like hotcakes. But that title was published in the current quarter, yet management kept talking about it as if last quarter's results depended on it.
They could have focused on Mafia II and the marketing blitz that's planned for it, including national TV and print ads, unique package deals when you pre-order the game from Wal-Mart or GameStop
Take-Two is known mostly for its Grand Theft Auto franchise, which inspired Electronic Arts
It's just a management mess, though. Besides focusing on the wrong talking points, the steady stream of hit releases fails to make any money. Both EA and Activision Blizzard
I bought Take-Two after that failed takeover attempt, thinking that the company would straighten out its sloppy operations and prove that EA should have paid more when it had the chance. Now, I'm not so sure of that thesis anymore. Why would one of the big boys want to buy an inefficient cash-burner, no matter how tasty the game portfolio?
I've canceled my "outperform" rating on Take-Two in CAPS at a loss. Unless management screws its collective heads on the right way and start showing some derring-do and panache, I might sell my real shares, too. Stay tuned.
Is Anders jumping to conclusions, or should he have seen the problems two years ago? Discuss in the comments below.
Fool contributor Anders Bylund still owns shares in Take-Two, but he holds no other position in any of the companies discussed here. Wal-Mart Stores is a Motley Fool Inside Value recommendation. Take-Two Interactive Software is a Motley Fool Rule Breakers choice. Activision Blizzard and Electronic Arts are Motley Fool Stock Advisor recommendations. Motley Fool Options has recommended a synthetic long position on Activision Blizzard. Motley Fool Options has recommended writing covered calls on GameStop. The Fool owns shares of Activision Blizzard. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.