Video game publisher Take-Two’s new managers tout revival plan
Less than two weeks after commandeering Take-Two Interactive Software Inc. in a boardroom coup, the video game publisher’s new management team Tuesday presented investors with a 100-day turnaround strategy.
Control of Take-Two, maker of the popular “Grand Theft Auto” series, now rests in the hands of Chairman Strauss Zelnick and interim Chief Executive Benjamin Feder, both former media industry executives.
They outlined a plan to cut expenses, sell nonessential assets and add discipline to its process of deciding which games to develop.
Zelnick scored a point Tuesday when the New York-based company, whose shares had been in danger of being delisted for failing to file financial reports on time, said it had gotten back in Nasdaq’s good graces.
“Don’t look at what I say. Look at what I’ve done,” Zelnick, former chief executive of BMG Entertainment and former president of 20th Century Fox, urged investors. “We’re not here at Take-Two to entrench ourselves in the swanky executive suite. We’re here to create value for our shareholders.”
Feder, a former News Corp. executive vice president, suggested that Take-Two might sell its game distribution business, Jack of All Games.
The plan struck the right note with analysts, who welcomed the new team’s open approach. But some remained skeptical that Take-Two’s problems could be solved quickly.
“Take-Two now has adult supervision,” said Michael Pachter, analyst with Wedbush Morgan Securities, who has a “sell” rating on the stock. “Do the employees have the talent, and does the company have the assets to create shareholder value? Can you win the World Series with the Bad News Bears? I don’t know.”
Take-Two shares fell 38 cents to $20.38 in regular trading Tuesday, then rose 14 cents in late trading after the conference call.
In February, Take-Two’s former CEO, Ryan Brant, pleaded guilty to falsifying financial records in the backdating of stock options and paid a $7.3-million fine.
Last week, Take-Two disclosed that it was under formal investigation by the Securities and Exchange Commission for its accounting of option grants.
Analysts said cleaning up Take-Two’s books would be the least of the new management’s worries. A bigger challenge would be reversing the company’s financial slide. It lost $185 million last fiscal year, which ended Oct. 31.
Dissatisfied with Take-Two’s losses, investors including Oppenheimer Funds Inc. banded together in March to elect a slate of directors and oust Chief Executive Paul Eibeler.
*
