Take-Two Rocked News
Chris Leyton
27/01/2006
Share price drops, Hot Coffee causes a storm (once again) and board member announces resignation...
The significance (some could say over-reliance) of Rockstar Games GTA franchise to parent company Take-Two was again highlighted, with shares in the US publisher rocked by a number of issues.
Claiming that the hugely significant GTA4 won't ship for the next-gen formats (PS3 and Xbox 360) until 2007, the Banc of America today cut its rating to "sell" from "neutral" leading to an 19% drop in Take-Two's share price.
In addition the leading financial broker claims that Take-Two are burning cash "at an alarming rate" with suggestions that its cash levels could drop alarmingly to $75 million by the spring.
Lowering its fiscal 2006 earnings-per-share estimate to 59 cents from 80 cents, the Banc of America blames the company's "inability to release games in a timely fashion."
The company was further rocked by news of the story that refuses to go away in the shape of the "Hot Coffee" saga, with Los Angeles city attorney set to sue both Rockstar Games and Take-Two Interactive for allegedly hiding pornographic material inside GTA: San Andreas.
If that wasn't all, it has also emerged that the head of Take-Two Interactive's audit committee and board member, Barbara Kaczynski, has resigned in a rather acrimonious split. Blaming the relationship between Take-Two Interactive's management with the board, Kaczynski's letter is alleged to have hit out at the mistakes that have led to investigations from both the Securities and Exchange Commission and the Federal Communications Commission.
Commentators suggest further management departures, particularly at Rockstar Games, in a company that has witnessed four chief executives in the past three years; three chief financial officers in the past four years and three chairmen of the board.
With so much doom and gloom predicted it's worth bearing in mind the increasing strength of 2K Games portfolio backed by a number of sensible acquisitions; whilst only a fool would deny the guaranteed success of a certain Rockstar Games title once 2007 comes around.