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Earnings: Take-Two's Losses Grow; Settles 'Hot Coffee' Suit For $20 Million

Game publisher Take-Two Interactive (NSDQ: TTWO) is struggling to evolve into more than just a one-franchise company — but without a Grand Theft Auto release to pump up sales, it continues to lose money.

It posted a 72-cents per share, $55.5 million loss for Q309; that’s in contrast to a 67-cents per share, $51.8 million profit in Q308, but also a bigger loss than in the previous quarter. Revenue was also down sharply year-over-year and sequentially.

The poor performance disappointed investors, who sent the stock down by about 3 percent in after-hours trading — though Take-Two’s sales actually beat analysts’ expectations by about $8 million.

3Q 2009 3Q 2008 Analysts Estimates For 2009
EPS -$0.72 $0.67 -$0.65 to -$0.75
Net Income -$55M $51.8M NA
Revenue $138M $433.8M $120M – $130M

Out from the shadow of “Hot Coffee”: Take-Two was rocked by scandal in mid-2005 when a sexually-explicit mini-game was discovered in then best-seller Grand Theft Auto: San Andreas. Part of the problem stemmed from the company’s insistence that the scenes were only accessible if gamers actually modified the game’s original code; opponents alleged that the sex scenes had been included from the start.

In addition to harsh words from politicians and a class action suit filed by consumers that purchased the game for minors, Take-Two also faced a consolidated securities suit filed by investors. The company announced today that it settled the consolidated securities suit for just over $20 million — of which it will pay about $5 million. The balance will be paid by its insurance carriers. Take-Two said it already accrued for its portion of the payout in previous quarters.

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One Response to “Earnings: Take-Two's Losses Grow; Settles 'Hot Coffee' Suit For $20 Million”

  1. Good article but it seems that most stocks disappointed most investors in 2009. Although, if they had a web 2.0 marketing strategy rather than dumping their money into traditional advertising Take-two might have done better.