Shares of Take-Two Interactive Software Inc. plunged ahead of the regular session Friday after the video game maker lowered its financial outlook again and said it probably won't meet its profitability goals for next year.
The news late Thursday rattled analysts and investors, who sent Take-Two shares down $3.09, or 28 percent, to $7.83 in premarket trading.
In a note, Todd Mitchell, an analyst with Kaufman Bros., said the outlook is "indicative of broader problems at the company with regards to accountability which we though had gone away." He cut the company's stock to "Sell" from "Buy" and lowered his price target to $7 from $14.
Take-Two blamed the weak forecast on disappointing sales of its "Major League Baseball" titles. The overall video game industry has weathered a tough year, with consumers cutting back on discretionary purchases.
The company's chairman, Strauss Zelnick, said Take-Two won't meet its goal next year of turning an operating profit on an adjusted basis.
For the quarter that ended in October, the company expects to report earnings of 5 cents to 10 cents per share. Its forecast in September called for 30 cents to 35 cents and analysts had been expecting 33 cents.
Take-Two is also expecting bigger losses for the full year and the first quarter of fiscal 2010 than Wall Street anticipated.
It projects an adjusted loss of $1.10 to $1.15 per share for fiscal 2009, while analysts expected a loss of 84 cents per share. In the fiscal first quarter, it expects to lose 40 cents to 50 cents, compared with the average forecast of a loss of 26 cents.
Brean Murray analyst Andrey Glukhov said the company's "soft" 2010 outlook "is fairly frustrating" and cut his rating to "Hold" from "Buy."