Take-Two cuts outlook on sale of unit

AP News
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Posted: Dec 21, 2009 6:03 PM

Take-Two Interactive Software Inc. on Monday cut its 2010 financial forecast as the video game maker announced a deal to sell its distribution arm to Synnex Corp. for $43.3 million.

Excluding the unit's results, Take-Two now expects to report an adjusted loss of 45 cents to 55 cents per share on sales of $90 million to $140 million for the quarter ending in January. That's down from a prior forecast for a loss of 40 cents to 50 cents per share on sales of $210 million to $260 million.

Analysts polled by Thomson Reuters have predicted a loss of 47 cents per share and sales of $227 million, on average.

Take-Two also lowered its full-year projections to a loss of 48 cents to 68 cents per share on sales of $710 million to $910 million. Last week the company had forecast a loss of 40 cents to 60 cents on sales of $1 billion to $1.2 billion.

Take-Two shares dropped 51 cents, or 5.4 percent, to $8.92 in extended trading after closing up 4.7 percent at $9.43.

The company, which owns the "Grand Theft Auto" video game franchise, has been struggling with rising expenses. It posted a loss of $137.9 million for its most recent fiscal year, which ended in October.

Synnex Corp. said it has agreed to pay $43.3 million in cash for the North American operations of Take-Two's All Games Inc., including $6.75 million in deferred payments that are contingent on the business meeting certain financial goals.

Fremont, Calif.-based Synnex provides contract distribution and manufacturing services. The deal will give it distribution rights for game consoles, games and accessories from companies including Activision Blizzard Inc., Electronic Arts Inc., Microsoft Corp., Nintendo and Sony Corp. in addition to Take-Two.

The deal is expected to close in the first three months of 2010.