Take-Two swings to profit, courts suitors
Take-Two Interactive Software Inc., publisher of the blockbuster Grand Theft Auto IV game, is in “formal discussions” with potential suitors, Chairman Strauss Zelnick said Thursday.
Take-Two has been the target of a $2-billion takeover bid by Electronic Arts Inc., the game industry’s 800-pound gorilla. Zelnick and his team at Take-Two have said the price was akin to highway robbery.
Zelnick didn’t name the suitors during a quarterly earnings call with analysts, saying Take-Two was not required to disclose the identities with the Securities and Exchange Commission until the “discussions” turned into “negotiations.”
Silicon Valley corporate attorney Scott Dettmer said discussions were equivalent to “the first few dates, and talking vaguely about whether you like children or not.” Negotiations were like “talking about how many kids, and how soon.”
The way Zelnick sees it, his prospects improved significantly when Grand Theft Auto IV, which hit stores April 29, generated $500 million in sales during its first week.
Those sales turbocharged the New York company’s second-quarter financial results. Revenue more than doubled to $540 million from $205 million a year earlier, even though GTA IV had been out for only two days in the quarter ended April 30. Take-Two swung to a profit of $98 million, or $1.29 a share, from a year-earlier loss of $51 million, or 71 cents.
GTA IV set a first-day record of about $310 million in sales, passing the $170-million benchmark set by Microsoft Corp.’s Halo 3 last year. By the end of May, the company said, consumers had bought about 8.5 million copies.
Take-Two forecasted a profit of $1.65 to $1.85 a share on sales of as much as $1.5 billion for the full year ending Oct. 31. That’s well ahead of its March prediction for an annual profit of $1.35 to $1.55 a share on sales of as much as $1.4 billion.
Investors were marginally impressed. Its shares gained 34 cents to $27.65 in regular trading, then an additional 7 cents to $27.72 after hours.
Still, Wall Street is betting that a merger will occur and that Electronic Arts in Redwood City, Calif., will cough up a bigger engagement ring. Its current offer is $25.74 a share.
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