For a company that managed to lose money for the second quarter, Take-Two Interactive (NASDAQ:TTWO) was remarkably upbeat on its conference call, and it looks as though investors like it as well, because the shares are up on what is largely a down day.

On the product front, there are some reasons for investors to be optimistic. Take-Two's newest titles, Midnight Club 3: DUB Edition and Major League Baseball 2K5, performed well and represented about 34% of sales. And the company managed to lose one fewer penny per share than analysts were expecting.

Take-Two is also well-positioned across the various home and portable platforms from Sony (NYSE:SNE) and Microsoft (NASDAQ:MSFT). The only disappointment here is that some titles will be delayed, and with the delay, profits will come in a bit later. However, that's a short-term effect, and the company has ample cash on its balance sheet.

As exciting as all of Take-Two's new titles are, and the idea that future titles hold lots of promise as well, I'm surprised that investors would choose Take-Two over Electronic Arts (NASDAQ:ERTS) and Activision (NASDAQ:ATVI). While the lower valuation on Take-Two may make it attractive, the company's problems are at the management level. Turn back to last year and Take-Two's accounting problems, and you'll find that the same people are still running the company. This isn't news, but I do wonder why investors suddenly feel that it's OK to start wading into the pond again.

If some members of management had stepped in and bought large blocks of shares, there would be good reason to be curious, but that's not the case. They do, however, grant themselves options. Based on the company's recent proxy statement, 29% of the options granted last year were doled out directly to management, and when all of last year's options were granted, the total dilution amounted to 6.5% of the outstanding share count. The total grant of 6.5% is a bit large, but I've seen worse. The 29% of that grant to management is a bit much to stomach, though. And while options themselves aren't intrinsically bad, you do have to wonder about a management team with a history like this one's setting itself up to profit first.

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Nathan Parmelee has no financial interest in any of the companies mentioned.