Video game maker Take-Two Interactive Software announced better-than-expected earnings on Thursday thanks to recording-setting sales of Grand Theft Auto IV.
For the second quarter ended April 30, net profit was $98.2 million, or $1.29 cents per share, compared with a net loss of $51.3 million, or 71 cents per share, in the second quarter of fiscal 2007. Sales were up more than 160 percent to $539.8 million for the period, blowing away analyst estimates of $499.1 million.
The company also raised its forecast for the remainder of the fiscal year.
Take-Two said it expects to earn 45 cents to 55 cents per share, excluding special items, on revenue of between $325 million and $375 million in its current, third fiscal quarter.
In May, Take-Two announced that the new game had raked in all-time records of $310 million on its launch day of April 29 and $500 million during its first week. The single-day figure shattered the previous record, set last September by Halo 3, of $170 million.
The company, which has rejected a $2 billion buyout offer from rival game maker Electronic Arts, is also having " formal discussions" with other parties about strategic alternatives, Chief Executive Ben Feder told Reuters.
"The board remains committed to exploring strategic alternatives and we're actively engaged in that process now," Feder said. "We have had and are having formal discussions with a number of interested parties."
EA, which offered $25.74 a share for Take-Two in April, is undaunted in its takeover bid. The company recently announced another extension of its merger offer.
Shares of Take-Two were up 34 cents, or 1.2 percent, to $27.65 in after-hours trading.
Electronic Arts announced Monday that it is extending its tender offer for Take-Two Interactive Software to mid-June, marking its third extension in its hostile buyout attempt of its rival game maker.
Shortly after EA failed to make an attractive-enough offer, Take-Two's Grand Theft Auto IV shattered all-time launch sales records, lending support to Chairman Zelnick's argument that the bid undervalued the company.
(Credit: Rockstar Games)EA, which, to date, has received commitments from Take-Two investors to tender roughly 6.2 million shares, or 8 percent of the company, has extended its deadline to June 16. Previously, the deadline was set for May 16.
Taking a jab at its rival, Take-Two Chairman Strauss Zelnick issued a statement: "This is the same highly conditional proposal that EA offered Take-Two stockholders on March 13, 2008, which our board of directors thoroughly reviewed, and unanimously determined to be inadequate and contrary to the best interests of Take-Two's stockholders."
He further noted that Take-Two, in an effort to maximize shareholder value, has begun exploring strategic alternatives with interested parties, now that its record-breaking launch of Grand Theft Auto IV has wrapped up.
EA, which launched its hostile bid valued at $2 billion for Take-Two in late February, said despite the extension, its current offer remains the same.
"EA's offer price remains unchanged at $25.74 per share, and our offer is still subject to conditions that include regulatory approval. As stated earlier, we retain the right to terminate the offer, if the conditions are not satisfied," Owen Mahoney, senior vice president of EA corporate development, said in a statement.
Take-Two shares traded down 1.14 percent in Monday morning trading to $26.79 a share.
The publisher of the Grand Theft Auto video game franchise feels like it got ripped off in Chicago--and it's suing.
Take-Two wants ads for "Grand Theft Auto IV" replaced on CTA buses and display spaces.
(Credit: Rockstar Games)Take-Two Interactive Software sued the Chicago Transit Authority on Monday for allegedly pulling its ads promoting the latest version of the action-driving and crime game just days after the ads began appearing, thus violating its free-speech and contractual rights, according to a Reuters report.
The suit, which was filed in Manhattan federal court, seeks reinstatement of the ads on buses and display spaces, as well as monetary damages of at least $300,000, the reported value of the contract, according to the report.
The suit claims that ads for the game, which has been criticized as excessively violent, were removed after a television news report questioned why the advertisements were allowed to run following a crime wave in the city, according to the report.
This is not the first time the CTA has come under fire for GTA ads. In 2004, Illinois Gov. Rod Blagojevich criticized the transit authority for agreeing to run ads for Grand Theft Auto: San Andreas, leading the CTA to remove the ads, according to a report in the Chicago Tribune.
Take-Two hasn't yet released the game's first-week sales figures, but analysts are expecting sales to top last year's record $300 million first-week sales of Halo 3. The game is expected to sell more than 9 million copies.
A shareholder of Take-Two Interactive Software has sued the company for rejecting Electronic Arts' $2 billion takeover bid, The Wall Street Journal reported Monday (subscription required to read entire article).
The suit was filed Friday in a Wilmington, Del., court. According to the Journal, the suit charges that Take-Two executives sought to enrich themselves at the expense of shareholders through a compensation agreement, amended in February after EA made a private offer for the company, that could grant them a big pay-out if Take-Two is acquired.
Two law firms--Prickett, Jones & Elliott, and Schiffrin, Barroway, Topaz & Kessler--filed the suit, which names Take-Two Chairman Strauss Zelnick and CEO Benjamin Feder as defendants.
The New York Times reported on Wednesday that the board of directors for video game publisher Take-Two Interactive Software, facing a buyout offer from Electronic Arts, approved new compensation packages for its management firm that would take effect with a merger or acquisition.
The new measures, approved within days of EA's initial offer, concern Take-Two's agreement with management firm ZelnickMedia. Under the revised terms, in the event of a takeover, ZelnickMedia would be awarded two restricted stock grants of 780,000 shares.
At EA's $26-per-share offer, that would be worth $20 million. Additionally, Take-Two's monthly management fees to the firm would rise from $62,500 to $208,333; the annual bonus to ZelnickMedia would rise from $750,000 to $2.5 million.
Take-Two representatives say the move has nothing to do with EA's proposed acquisition. "The board discussions surrounding the ZelnickMedia management agreement began well before the company received a formal offer from EA on Feb. 6, 2008," Take-Two spokesman Steve Lipin told the Times, "and were not initiated as a result of conversations with any potential acquirer."
He added that Take-Two's shareholders have not yet approved the new compensation packages.
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