When I was at Financial World Magazine, we would do a list of the ten worst managed companies in America. The cycle was about once a year. To make the list, a company had to do a lot wrong compared to the rest of the stock market and its peer group. The financial results would have to be very poor, and companies in industries that were down across the board were usually not included. For this tech list, a number of financial sources were consulted along with research from Wall Street and sources like ValueLine, Morningstar, Investor's Business Daily and Yahoo!Finance.
The train wreck that is Take-Two Interactive (NASDAQ:TTWO), the big time video game company, is a screw-up of the first order. The Audit Committee Chairman resigns, the company dismisses its auditors, the company asks for an extension for its 10-K, the company is hit with multiple shareholder class action suits, the company has a loss in fiscal Q1 loss (1/31/06) compared to a profit a year ago. By the way, the departing director left a little present in the form of a letter critical of the way senior management communicated with the board.
And, this is only recently: The company got into all sorts of SEC trouble in 2002 and changed CEOs. Take-Two did some serious revenue restating. It looked like the new regime might make a difference, but by April 2004, the new CEO, Jeffrey Lapin,was gone.
All this from a company that has one of the great video game franchises, Grand Theft Auto. Moral issues about the content of the game aside.
So, after trading at nearly $30 in May 2005, the stock fell below $14 recently, and has recovered to about $19.
The company's last four quarters of revenue have been uneven at best and in three of them Take-Two had operating losses. Maybe that is why the company only trades at 1.4 times revenues according to Yahoo!Finance.
Who said "what can go wrong, will go wrong"?
TTWO 1-yr Chart
Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He was also president of Switchboard.com when it was the 10th most visited site in the world, according to MediaMetrix. He has been chief executive of On2 Technologies, Inc. and FutureSource, LLC and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. He can be reached at firstname.lastname@example.org.