Take-Two shares tumble as game maker cuts outlook

AP News
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Posted: Dec 03, 2009 4:52 PM

Shares of Take-Two Interactive Software Inc. tumbled 17 percent in after-hours trading Thursday after the video game publisher slashed its full-year guidance for a second time, due in part to weak sales of its "Major League Baseball" titles.

Chairman Strauss Zelnick also said the company remains committed to its goal of operating profitably on an adjusted basis, but does not "currently expect to achieve that goal in fiscal 2010."

Take-Two said the weak performance of "Major League Baseball" titles cut earnings by about 9 cents per share during the fourth quarter. It also booked inventory write-downs on its distribution business, mainly related to games for older consoles such as the PlayStation 2, and saw lower-than-expected sales of some of its important holiday releases as well.

After a slight reprieve in September, U.S. video game sales slumped once again in October, hurt by the economic turmoil that's cutting into consumer spending.

The New York-based company now expects to report adjusted earnings of 5 cents to 10 cents per share for the fiscal fourth quarter ended Oct. 31. That's well below the 30 cents to 35 cents per share it forecast in September, as well as the average estimate of 33 cents forecast by analysts polled by Thomson Reuters.

The company also trimmed its sales guidance to a range of $325 million to $350 million for the quarter from $350 million to $375 million previously. Analysts are expecting $371 million, on average.

For the full year, the company expects to post an adjusted loss of $1.10 to $1.15 per share, on sales of $950 million to $975 million. Looking ahead to the fiscal first quarter, Take-Two expects an adjusted loss of 40 cents to 50 cents per share on $210 million to $260 million in revenue.

Both loss forecasts widely miss Wall Street's consensus outlook for a much smaller full-year loss of 84 cents per share on higher sales of $995.1 million and a first-quarter loss of 26 cents a share on revenue of $244.2 million.

Take-Two had originally expected to break even or even post a profit of up to 20 cents per share in fiscal 2009 on revenue of $1.05 billion. But in July, the company cut its outlook due partially to delaying the highly anticipated "BioShock 2" into 2010. It has said the retail environment is proving to be "even more challenging" than initially projected.

Take-Two said Thursday "BioShock 2" is on still target for release on Feb. 9.

Shares fell $1.90, or 17.4 percent, to $9.60 in after-hours trading. The stock had closed earlier down 39 cents at $10.92.