Take-Two Shareholders Oust Board Members

Take-Two held its annual shareholder meeting yesterday and a group of disgruntled stockholders owning 46.1% of the company stock succeeded in overthrowing the board and replacing it with seven directors of their choice.

The new Take-Two Board of Directors consists of Strauss Zelnick, Ben Feder, Jon J. Moses, Michael Dornemann, Michael James Sheresky and incumbent independent directors John Levy and Grover C. Brown. Strauss Zelnick, former CEO of BMG Entertainment and Crystal Dynamics, became the new chairman of Take Two, and Ben Feder, formerly a senior executive at News Corp, has been named acting CEO, replacing Paul Eibeler.

Whoa, now that's something you don't see every day.

Take-Two Interactive (TTWO) gapped up this morning but it's down over 2% this afternoon. I guess the institutions didn't like the fact that the owners overthrew management.

Whatever... just get the new Civ expansion pack out.

It remains to be seen what direction the new board of directors will take the company. Guaranteed some divisions will be sold or closed.
At this point, no one knows for sure if this is good, bad, or neutral for the Civ series.
My wild, and highly opinionated, guess is that Take2 will focus more on the lucrative casual gamer market, which will be bad for hard core TBS games like Civ.

We won't have a solid idea for quite a few months.

I nominate Sid Meiers for replacement CEO!

Maybe Take-two selling Firaxis may be a good thing... I shuddered when I first heard that Take-two bought Firaxis just after Civ4 came out. Now I know my instinct was on the money (so to speak).

Maybe this new board will try to build on things rather than squeeze something out. Hmmm. makes you wonder: If the expansion schedule was moved forward with the old board in control, then maybe it might be moved back now?

So... is this good or bad?

this is bad coz the CEO is a news corp guy. Freaking Murdoch should go to hell.

They will likely take a few months to figure out the divisions with the most growth potential strategically (next 3-7 years) and look at potentially selling those with the most development time/high cost to support short term earnings...think making investors happy now.

My opinion is this is good for the expansion pack, but beyond that they will look closely at selling Firaxis. They will likely decide not to sell due to the fact that they are probably still paying goodwill and it would be a stupid bet. They will never be able to make up what they paid and will take a discount on the sale.

I'm worried...and don't plan on a CIV V anytime soon...

Selling Firaxis?

No chance. Civ is one of their bigger money makers.

Thunderfall said:

Take-Two held its annual shareholder meeting yesterday and a group of disgruntled stockholders owning 46.1% of the company stock succeeded in overthrowing the board and replacing it with seven directors of their choice.

The new Take-Two Board of Directors consists of Strauss Zelnick, Ben Feder, Jon J. Moses, Michael Dornemann, Michael James Sheresky and incumbent independent directors John Levy and Grover C. Brown. Strauss Zelnick, former CEO of BMG Entertainment and Crystal Dynamics, became the new chairman of Take Two, and Ben Feder, formerly a senior executive at News Corp, has been named acting CEO, replacing Paul Eibeler.

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Wow, now the entire board of directors is Jewish.

12Voltman said:

My opinion is this is good for the expansion pack, but beyond that they will look closely at selling Firaxis. They will likely decide not to sell due to the fact that they are probably still paying goodwill and it would be a stupid bet. They will never be able to make up what they paid and will take a discount on the sale.

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Technically after they changed the Goodwill accounting rules a couple years ago Take Two is supposed to check for Goodwill impairment every year and write down the Firaxis purchase Goodwill if necessary. You're no longer required to depreciate Goodwill like other capital assets.

Of course beancounters are notoriously picky about write downs, however it's not uncommon for new boards in this situation to order a complete rebaseline of the company's financial position.

Ranbir said:

Selling Firaxis?

No chance. Civ is one of their bigger money makers.

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That's what I was thinking, Civ was one of the top 5 games of the year in sales. Plus, even if they sold Firaxis, Firaxis existed long before Take 2 bought them to begin with.

carpejugulum said:

Technically after they changed the Goodwill accounting rules a couple years ago Take Two is supposed to check for Goodwill impairment every year and write down the Firaxis purchase Goodwill if necessary. You're no longer required to depreciate Goodwill like other capital assets.

Of course beancounters are notoriously picky about write downs, however it's not uncommon for new boards in this situation to order a complete rebaseline of the company's financial position.

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Excellent - I knew there would be an accounting guru out there somewhere in CIV land.

Pleased to meet you carpejugulum.

Lets just hope for BTS to come out before CIV starts to tank.

Sweet. We can try lobbying a new group of people to improve the Civ III editor!

There is no way in hell they would let Fraxis go.

Astax said:

There is no way in hell they would let Fraxis go.

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I can't tell you what they will or won't do but I can tell you that Firaxis is a pretty small blip in Take Two. Out of curiosity I took a quick spin through the last 10Q:

- At the height of Civ IV release in 2005 it was generating 5% of total revenue for Take Two compared to their flagship Grand Theft Auto games bringing in 25%.

- For last quarter none of the Firaxis games ranks in the top 10 revenue-wise, meaning none of them are more than 1.6% of revenue--about $4.5mil.

- Overall Firaxis brought in 11.5% of their revenue last quarter on the PC platform, close to what they get for Nintendo handhelds and Xbox, far behind their meat and potatoes ("you have showed the leadship ability of Dan Quayle") Playstation releases.

- From a balance sheet standpoint they're not in terrible shape. They have $100mil+ cash equivalents and minimal long term debt. Goodwill is at $188mil. Over the history of the company they've made about $39mil in profits and collected $487mil in sales of stock.


Again, don't know what the new board is planning to do, but I wouldn't be shocked by changes or selloffs of anything except the GTA line.