Take-Two Announces Q2 2006 Reports News

Take-Two Interactive today delivered financial reports for its second fiscal quarter ended April 30th, 2006.

Explaining the difficulties faced during the period, Paul Eibeler, President and Chief Executive Officer, claimed, "While near-term financial results continue to be impacted by the console transition, we are confident that we have positioned Take-Two for the long-term by streamlining our organization while maintaining an extremely talented global development team. We will continue to focus on creating compelling content, operating in a cost-efficient manner as we navigate the console transition, and aligning our resources to drive improved financial performance in 2007 and beyond."

Net revenue for the period rose to $265.1 million compared to $222.1 million in the same period last year; however, Take-Two recorded a net loss of $50.4 million during the quarter compared to a net loss of $8.2 million in the previous year's second quarter, as a result of a $26.3 million charge for asset write-offs and studio closures relating to cost savings initiatives.

For the six months up to April 30, 2006 Take-Two posted $530.1 million compared to $724.5 million for the same period a year ago. As a result net loss for the six-month period stood at $79.5 million compared to a net income of $47.1 million in the six months to April 30, 2005.

Commenting on the strong sales of GTA: San Andreas throughout 2005, Take-Two also attributed the lower year-to-date results on continued weakness of videogames at retail and lower pricing during the Christmas season throughout North America and Europe. Whilst revenues for the second quarter 2006 exceeded results in the same period in the previous year, Take-Two associate the drop in profitability to the significant percentage of publishing revenues from co-published and licensed titles, which have lower margins than internally owned and developed titles.

In an effort to adjust to the challenges posed by the "current difficult business environment", Take-Two has taken a number of steps to reduce costs associated with its business, resulting in write-offs and studio closures. Non-cash charges of $24.3 million were related to the write-off of several titles in development and certain trademarks, along with costs of $2 million from the closure of two development studios - Indie Built and Rockstar Vienna. Intriguingly Take-Two also refer to a third studio closure in the third-quarter, Frog City, developers behind the recently cancelled PC RTS Snow, which will lead to an additional cost of $3 million. The resulting studio closures and cost saving measures are believed to save Take-Two approximately $28 million in the long-term.

Looking ahead to the third-quarter ended July 31st, Take-Two have already seen the release of Rockstar Games presents Table Tennis for the Xbox 360, GTA: Liberty City stories for the Playstation2 and The Da Vinci Code for multiple formats. Take-Two expects the release of Prey for the PC and Xbox 360 to ship during this quarter, along with Sid Meier's Civilization IV: Warlords and CivCity: Rome.

Intriguingly the report also mentions the release of Rockstar's controversial Bully for a 2006 release, the first time that the title has been sighted for a considerable time and confirming that the game is still set for a release amidst talk that it had been quietly canned. Rockstar Games will also release GTA: Vice City stories for the PSP in October 2006.

2K Games line-up for the rest of the year includes Sid Meier's Railroads!, Stronghold Legends and Dungeon Siege II: Broken World, all for PC; Dungeon Siege: Throne of Agony for the PSP; and Family Guy for current generation console systems. 2K Sports has various titles planned including NBA 2K7, NHL 2K7, College Hoops 2K7, and additional products based on the Major League Baseball license. Global Star is planning Family Feud for multiple platforms, among other titles.

Moving forwards into 2007 and 2008, Take-Two anticipates better times with the hugely anticipated release of GTA IV for the Xbox 360 and Playstation3, along with "sequels to several of Rockstar's other successful franchises".

2K's 2007 line-up also includes the eagerly awaited BioShock for the PC and next-generation consoles, along with The Darkness for next-generation platforms and Ghost Rider for current-generation systems. For 2007 and 2008, 2K Sports anticipates a solid lineup of sports titles based on licenses with Major League Baseball, the National Basketball Association, the National Hockey League and the National Collegiate Athletic Association, as well as proprietary unlicensed sports brands including tennis and boxing games.