Take-Two Posts $55m Q3 Loss, Settles Hot Coffee Saga News

The impact of the release of GTA IV in 2008, saw Take-Two Interactive post a 68% drop in net revenues of $138.6 million for the third quarter ended July 31st 2009, compared to the $433.8 million posted in the same quarter last year.  

As a result, the US publisher recorded a net loss of $55.5 million compared to a net income of $51.8 million in the third quarter of fiscal 2008.  Although this loss was slightly smaller than analysts were previously expecting.

Having recently delayed key titles into 2010, Take-Two revised its fourth quarter forecast slightly to revenue of $350 to $375 million.  Revenue for the full year ending October 31st 2009 remains the same as previous guidance and is expected to reach $0.975 million to $1.0 billion.

In addition, Take-Two confirmed that it has finally brought the long-running GTA: San Andreas 'Hot Coffee' saga to a conclusion.  The publisher announced that it will pay $20.1 million to settle a class action surrounding the infamous sex mini-game and the backdating of employee stock options.

During the following earnings call, Take-Two's executives reflected on the current economic situation, LA Noire, GTA5 and Project Natal.

Although Take-Two continues to see the world economy as challenging, the publisher confirmed that it has seen improvements in France and Germany.  When asked specifically about the UK, Benjamin Feder CEO remarked:

"You know, the U.K., I would say maybe not -- you know, the thing about France and Germany, just showing kind of what's known as early green chutes now. I don't think we've seen that out of the U.K., per se. In terms of our own catalog and our own products, certainly for third quarter, seems to be doing okay, seems to be holding up."

When questioned about the impact of the price cuts from Microsoft and Sony, Take-Two remained cautiously optimistic.

"We are pleased that both Sony and Microsoft have reduced the price of their systems and we hope that will serve as a catalyst for the continued growth of our industry and also help to expand the audience for our titles."

Feder earlier remarked that, "European hardware sales have held up reasonably well on the PS3 and Xbox 360 and we have seen a broadening of market demographics through further hardware adoption of the Wii and DS."

Although the publisher refused to be specific regarding the quartet of titles that were pushed into 2010 (Red Dead Redemption, Mafia 2, Max Payne 3, Bioshock 2), Strauss Zelnick Chairman, claimed that all titles are still scheduled during the first half of calendar 2010 but not before January 31st.

When asked about the timeframe surrounding the next major instalment in the GTA series, Zelnick defiantly claimed:

"So we're not going to announce it, we're not going to announce when we are going to announce it, and we are not going to announce a strategy about announcing it or about when we are going to announce it either, or about the announcement strategy surrounding the announcement of the strategy."

The disappearance of LA Noire was also addressed during the call, although Feder remained elusive:

"It's in development. Nothing to announce today. And when we have more to announce, we will announce it but we're continuing to develop it. We think it's pretty exciting and innovative and when we have more to share, we'll share it."

Finally a question surrounding the publisher's plans for Project Natal, confirmed that the publisher's studios have dev kits and are working on titles.

"In terms of your other questions, Natal motion sensor, yes, we have dev kits. Yes we are working on them. Obviously can't comment on games that we haven't announced but those dev kits are embedded in all of our studios or just about all of our studios and everybody is working with them to try to figure out new ways in which we can innovate and create the kind of content that this company is famous for. So yes, we are working on it."