Take-Two Interactive Software's shares plummeted Thursday in AH trading after the company revealed it would be required to delay, by as much as six months, the release of 'Grand Theft Auto [GTA] IV'. The delay, which means the newest GTA will not be out in time for this holiday shopping season, forced Take-Two to lower its guidance and incur a large loss in its current fiscal year, which concludes in October. Take-Two had previously forecast and reaffirmed full year sales of $1.2-1.25 billion and break-even EPS. It now expects full year sales of $950 million to $1 billion and a per-share loss of $1.25-1.35 excluding one-time items. Shares fell 18.69% in after-hours trading on the announcement. Take-Two was expecting to sell 10 million copies of GTA IV in the 12 months following its release. According to Wedbush analyst Michael Pachter, Take-Two will likely have to "fully draw down their $100 million line of credit, and depending on the timing of the revenues from GTA, they may be very low on cash by early next year." GTA IV was slated for release on both Sony's PS3 and Microsoft's Xbox 360. Analysts expressed concern that sales of the gaming consoles could be hurt during the holiday season on the delay of GTA, one of the most popular selling video games of all time. Xbox might be less affected, with the newest version of best-seller Halo being released in October.
Sources: Press Release, Bloomberg, MarketWatch, Reuters, Dow Jones Newswire, Financial Times
Commentary: Take-Two Interactive In Need Of Adult Supervision • Take Two Announces Restructuring Plan • Take Two Announces Restructuring Plan; Posts Q2 Loss
Stocks/ETFs to watch: TTWO, SNE, MSFT. Competitors: ATVI, ERTS. ETFs: IGV, SWH, PSJ
Earnings call transcripts: Take-Two F2Q07
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