Take-Two Reports Updated Finances

[Ginger_Ale]

Take-Two, parent company of 2K Games, the publisher of Civilization, released its finances for the fourth quarter and the overall fiscal year on Wednesday. Compared to this time last year, they seem to be doing better. Remember that Electronic Arts tried to acquire Take-Two earlier this year and so there has been pressure on the company to meet expectations.

Net revenues were a record $1,537.5 million for the fiscal year ended October 31, 2008, compared to $981.8 million in fiscal 2007. Net income for fiscal 2008 was a record $97.1 million or $1.28 per share, compared to a net loss of $138.4 million or $1.93 per share in fiscal 2007.

"Take-Two's record results for the 2008 fiscal year reflect the fundamental strength of our business model," said Strauss Zelnick, Chairman of Take-Two. "Our performance has benefited from the strategies we've implemented during the past 18 months to unlock the potential of our creative talent, sharpen our focus on the core business, and take costs out of our operations."

Also of note is the fact that Take-Two earned just 3% of its "publishing revenue" from PC sales, while consoles, notably the PlayStation 3 and Xbox 360, account for most of their revenue.

>> Read Take-Two's detailed press release

 

[Sullla]

Doing better!?! No offense, GA, but you could not be more incorrect in your assessment of Take-Two's financial situation. They released Grand Theft Auto earlier this year, and still barely turned a profit for the current fiscal year. Furthermore, how does your revenue increase by 60% year on year, while the company still only ekes into the black?

You also left out the part where Take-Two lost more money in the current quarter, compared to last year:

Net loss for the fourth quarter was $15.0 million or $0.20 per share, compared to a net loss of $7.1 million or $0.10 per share in the fourth quarter of fiscal 2007.

And this line from the chairman:

Looking ahead in a poor economy to a year with no major console retail Grand Theft Auto release planned, board chairman Strauss Zelnick says that the company is "drastically" reducing its expectations for next year.

And the response from the business community, which had this reaction:

The company's much-reduced outlook for 2009 is disappointing shareholders and analysts, with Reuters noting that Take-Two "...expects profit for the year ending in October 2009 to range between nil and 20 cents per share, significantly missing the average analysts' estimate of $1.21 per share."

First-quarter outlook was also massively reduced from analyst estimates - as a result, Take-Two shares are down almost 20% to $9.90 in after-market trading. (Source: Gamasutra article, http://www.gamasutra.com/php-bin/news_index.php?story=21536)

Did I mention that Take-Two's stock has fallen to its lowest level in almost ten years? And the fact that they just had to take out a $71m loan just to meet operating expenses for the current quarter?

You might want to take a look at the discussion we had on this topic on another website devoted to gaming sales numbers: http://www.vgchartz.com/forum/thread.php?id=53400&page=1

 

[Sullla]

Sorry, just can't get over how badly Take-Two has been doing lately. Look at a graph of their stock quote for this year, like this one: http://moneycentral.msn.com/detail/stock_quote?Symbol=TTWO

EA's buyout offer for Take-Two was at $27 per share. Keep that in mind.

Stock price in August (right before buyout offer was rescinded): $25
Stock price in September: $16
Stock price in October: $13
Stock price in November: $10

Current stock quote: $8.43

You can say a lot of things about Take-Two, "seem to be doing better" isn't one of them!

 

[Thunderfall]

To be fair though, not many companies are doing well in this economy.

Electronic Arts is doing very bad as well. Check out its 1 year or 5 year chart:

http://finance.google.com/finance?q=NASDAQ:ERTS

 

[Ginger_Ale]

Sullla, I was trying to keep my opinion in the post as limited as possible. In fact, most of the post was written using information or quotes from the press release.

All I meant was that, based on the revenue stream (which, admittedly, is a limited indicator) as well as net income, they were in a better situation than last year (although, yes, the situation overall is still poor. My statement was just talking in relative, not absolute, terms. I understand that they are still stuck in tough times, but you have to admit that they are indeed better off than in 2007.)

Based solely on the press release, I don't think it's too much of a stretch to assume that 2008 was more profitable than 2007, and so that's where my (one) comment was coming from. I tried to let the press release speak for itself, however.

Thanks for the links, though, as I will check them out.

 

[Comraddict]

3% of income from PC is yet another proof of rampant piracy on the PC platform.

 

[Sullla]

Oh, EA is doing atrociously bad too, Thunderfall. They're probably thanking their lucky stars that they DIDN'T purchase Take-Two earlier this year.

It's not just the economy though - many of these gaming companies are reporting record sales and revenue. But they're still losing money. Revenue up, profit down is a sure sign of a poor business model.

 

[redifederal]

Over a billion dollars in sales with almost a hundred million dollars in profit and they cant hire anyone to fix MP games from going oos from naval invasions.... Congrats on the good year but please take some of that profit and fix my game. Thanks

 

[Sub]

3% of income from PC is yet another proof of rampant piracy on the PC platform.

No it's not.

 

[Quintillus]

3% of income from PC is yet another proof of rampant piracy on the PC platform.

Well, Take Two does release far more platform-centric titles than PC. Civ is the only PC-centric one I know of, and its major release this year was CivRev for non-PC. Grand Theft Auto has a PC version now, but the console one has been out much longer and it always was better-selling on the console market as well.

Take a year when they release Civ but not GTA, and the PC sales would probably be higher. Who knows, if they ever released Duke Nukem Forever that might help PC sales relative to console a bit, too.

Definitely a mixed bag though, I'd say. Thought game sales had generally been fairly good recently though, in which case the $15 million loss this quarter is a bad sign. Especially with GTA4 having come out this year.

 

[cephalo]

I sure do hope that Firaxis is doing better than pulling it's weight. There like the only hope for decent PC games these days.

 

[RichPowers]

Oh, EA is doing atrociously bad too, Thunderfall. They're probably thanking their lucky stars that they DIDN'T purchase Take-Two earlier this year.

It's not just the economy though - many of these gaming companies are reporting record sales and revenue. But they're still losing money. Revenue up, profit down is a sure sign of a poor business model.

Yep, that's what happens when you can't make a game for less than $20 million. And even after EA invests that much, the games turn out like crap. How can a company that owns The Sims ever lose money?

Interestingly, I was reading how Stardock/Ironclad made Sins of a Solar Empire for less than $1 million and ended up with eight-digit revenue. More financial sanity like that in game development please.

I sure do hope that Firaxis is doing better than pulling it's weight. There like the only hope for decent PC games these days.

Maybe a few years ago. CivCity: Rome, Railroads!, and Colonization are laughable; I regret ever spending a dime on that tripe. I wouldn't be surprised if CivIV is the last decent game Firaxis makes. Hopefully they prove me wrong.

 

[cephalo]

Maybe a few years ago. CivCity: Rome, Railroads!, and Colonization are laughable; I regret ever spending a dime on that tripe. I wouldn't be surprised if CivIV is the last decent game Firaxis makes. Hopefully they prove me wrong.

CivCity Rome was actually developed by Firefly Studios, which is a shame considering they also made some very good games in the past before going under. I loved the original Stronghold games, and Space Colony was highly entertaining. Things really went south with Stronghold 2 though.