Take-Two on the ropes, shares down 18%, on cash burn worries [Update 1]

Shares of Take-Two Interactive Software Inc. have dropped nearly 18% after investors were spooked by a Banc of America securities report suggesting the company is burning cash at an "alarming" rate, cumulative delays in getting new products to market, and the resignation of board member Barbara Kaczynski on Wednesday, according to CNN.

Factors:

Running out of cash? Shares downgraded to "Sell" by Banc of America Securities analysts who believe each share is worth $12, not $17.00. Their primary concern: the company is burning through cash too quickly. More details here.
New California lawsuit: The California State Attorney General today launched a lawsuit against Take-Two alleging that the company hid pornographic material inside Grand Theft Auto: San Andreas. (Did the company knowingly hide this material in GTA:SA, or was it an accidental oversight?) More details here.
Board member resignation. Board member Barbara Kaczynski resigned because she felt that the company's management failed to keep the board informed about important issues with the company. She filed a doozy of a resignation letter with the SEC.

[Image from finance.yahoo.com]

[Thanks, Mandarin]

[Update 1: added additional information throughout]

Reader Comments (9)

The percentage* of net revenue for software:

Last year This year
PS2 45 39
Xbox 19 15
360 0 10
GameCube 9 7
GBA/DS 8 7
PC 17 13
PSP 2 9

If this didn't space correctly, my apologies, as there is no preview.

Comparing sales across all platforms from last year, there is a decline typical of every launch. But interestingly Xbox sales did not decline any more than PS2 and GameCube, as one would expect. I would have thought Xbox sales would have dropped off considerably more than the other two, but that didn't happen. I'm not sure if that means everyone is holding back on purchasing games until the next gen systems hit, or if PS2 and GameCube owners are buying the 360 as well. Or are PC people switching over? I don't have the numbers from the last few launches to compare, and there weren't many standout titles this year, so this may be typical. I'm not an analyst, but I just thought it was interesting.

*Numbers are based on available annual fiscal result reports of top multi-platform game companies.

Well, heck. So much for being the next EA. Looks instead like they'll become the next Majesco.

The only thing that can save TTWO now is a little announcement of something called GTA: Next Gen. With photorealistic pimping. Rated AO.

In regards to the lawsuit, I'd like to point out that Los Angeles City Attorney Rocky Delgadillo (the man who held the press conference announcing the lawsuit and is spearheading the effort) is running for state attorney general, and seems to be trying to win the family vote by speaking out against videogames, as is currently the popular gimmick with ignorant politicians.
I vote. Gamers vote. We shouldn't vote for people like Mr. Delgadillo if he insists on demonizing videogames as part of his political platform.
Go to his campaign site and tell him how you feel:
http://rocky2006.com/rocky2006/contact.html

Perhaps this primes them for takeover? I imagine that both Sony and Microsoft would love to have control of GTA.

Well some companies are probably checking out how much they are really worth... The GTA franchise is worth a lot of money..

Well thats the end of my favorite sports franchise.

"Perhaps this primes them for takeover? I imagine that both Sony and Microsoft would love to have control of GTA."

I don't know if any company wants to take all the heat GTA generates, lol...

Why is this company hellbent on destroying itself? They got an amazing stable of game franchises and yet seem unable to make money from them. Maybe it would be better to kill Take Two and sell the franchises to companies who would better know what to do with them.

Time to buy this stock. Analysts have been lowering this stock since early january. Today's move is an over reaction and the product base that they have is awesome and I know I will continue to buy their products.

Take-Two on the ropes, shares down 18%, on cash burn worries [Update 1]

Reader Comments (9)

Posted: Feb 13th 2006 10:57AM (Unverified) said

Posted: Jan 27th 2006 2:50PM (Unverified) said

Posted: Jan 27th 2006 3:09PM St McDuck said

Posted: Jan 27th 2006 3:15PM (Unverified) said

Posted: Jan 27th 2006 3:20PM mandarin said

Posted: Jan 27th 2006 3:37PM (Unverified) said

Posted: Jan 27th 2006 3:52PM (Unverified) said

Posted: Jan 27th 2006 6:04PM (Unverified) said

Posted: Jan 27th 2006 11:25PM (Unverified) said

Info

Description

MSRP

Release Date

Genre

Developer

Publisher

Rating

Breaking News

DmC Devil May Cry delayed, hitting January 2013

Featured Stories

Now Playing: May 21-27, 2012

Diablo 3 review: Hitting the jackpot

Stiq Figures, May 7 - 13: I'mma can't use any of my dominoes edition

Engadget

TUAW

Massively

WoW