Take-Two Loses $50 Million in Q2

June 9th, 2006, 02:16 Posted By: wraggster

Via IGN

Take-Two Interactive, home of Rockstar and 2K Games, today announced sharp losses for its second fiscal quarter, representing lower profit margins, the cost of studio closures, and the ongoing pinch of an industry in transition.



For the second quarter ending April 30, 2006, Take-Two reports net revenues of $265.1 million, nicely above the $222.1 million reported in the same period last year. The rise in revenues, however, is stung by the bottom line, where the company saw a net loss of $50.4 million, compared to a loss of just $8.2 million in Q2 last year.

Take-Two says that this year's numbers suffer in comparison to last year, when Grand Theft Auto: San Andreas was still hot. The company's sales star of the quarter, The Elder Scrolls IV: Oblivion, was co-published with Bethesda, meaning margins were lower than for titles Take-Two produces and publishes in-house. Finally, the company cites industry-wide sluggishness as companies and consumers move into a new console generation.

Why were losses so keen even as revenues were up? Take-Two faced non-cash charges of $24.3 million in dropping several titles in development, and closed its Rockstar Vienna and Indie Built studios, which incurred $2 million in costs.

For the year so far, Take-Two reported net revenues of $530.1 million compared to $724.5 million for the same period a year ago, and a net loss of $79.5 million compared to net income of $47.1 million in the first half of last year.

Earlier today, the FTC announced it has reached a settlement with Take-Two and Rockstar regarding the Grand Theft Auto "Hot Coffee" scandal. The settlement requires Take-Two to completely disclose game details going forward, but did not result in penalties or fines.

"While near-term financial results continue to be impacted by the console transition," commented president and CEO Paul Eibeler, "we are confident that we have positioned Take-Two for the long-term by streamlining our organization while maintaining an extremely talented global development team. We will continue to focus on creating compelling content, operating in a cost-efficient manner as we navigate the console transition, and aligning our resources to drive improved financial performance in 2007 and beyond."

Take-Two's future is full of promising titles, including this summer's Prey, Civilization IV: Warlords, and CivCity: Rome from 2K Games. Rockstar will offer Grand Theft Auto: Vice City Stories for the PSP in October, followed by Bully and an unnamed title based on a "premier brand," while 2K Sports will offer its annual roster of titles.

The company's roster is especially tantalizing in 2007, which should see the release of Grand Theft Auto IV, BioShock, The Darkness, and Ghost Rider, among others

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