Game Publisher Take-Two's Earnings Fall Sharply (TTWO F4Q05 (Qtr ending Oct. 31, 2005) Conf. Call Quotes)

Includes: ATVI, EA, TTWO

Game publisher Take-two Interactive (NASDAQ:TTWO) reported after the close yesterday that its F4Q05 earnings fell sharply, then cut its guidance for next quarter to a net loss, citing disappointing holiday sales and delays in product launches. TTWO, maker of the popular 'Grand Theft Auto' game, dropped over 8% after hours on the news.

TTWO is the latest in a series of major game publishers to release disappointing results -- see similar reports from Electronic Arts and Activision. Key numbers and quotes from the TTWO conference call:

  • Earnings: 27 cents/share (year ago: 91 cents/share)
  • Revenue: $308 million (down almost 30% year-over-year)
  • F1Q06 guidance: 'unspecified' loss (previous guidance: earnings of 4-10 cents/share)
  • In the conference call, Take-two CEO Paul Eibeler commented on what went wrong:

    the major factor affecting industry-wide software sales is the hardware transition. Although ultimately this will be a major plus for the industry, the hardware transition has affected business in several ways.

    First, sales of titles for current-gen platforms have not met expectations. Consumer spending levels for video games have been affected by the anticipation of new hardware. With the buzz around both the Xbox 360 and upcoming hardware, we believe that some consumers have moved from current-generation software purchases, especially shown in Xbox [one] game sales.

    Second, tight supplies of the Xbox 360 have impacted sales of games for that platform. We are encouraged by the consumer reaction to the Xbox 360, the high attach rate and the anticipation for additional shipments.

    In addition to the transition impact, we are facing tough comparisons with last year, when Grand Theft Auto -- San Andreas drove consumers to the stores. Taking all of these factors into account, the result has been disappointing sales for the holiday period across much of the industry, resulting in lower-than-expected reorders from retailers.

    (Quotes are from the CCBN StreetEvents transcript.)

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