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$14.02 -0.42 (-2.91%)
10/7/2008 1:39 PM

Take-Two Interactive Software, Inc. (TTWO)

CAPS Rating:
****

The Company is a global publisher, developer and distributor of interactive entertainment software, hardware and accessories.

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Avatar NetscribeGames (36.40) Submitted: 11/30/06 2:22 AM : Outperform Start Price: $17.75 TTWO Score: 4.76

“Take Two: Grand Story”. Take-Two Interactive is one of the leading developer, publisher, and distributor of games for multiple platforms. It is well known for the Grand Theft Auto series, which contribute close to 38% to the company’s overall revenue. The company has been focusing on diversified game content with publishing labels like Rockstar Games, 2K Games and Sports, and Global Star Software. In 2005, it recorded a market share of 10% in the console segment, only next to gaming giant Electronic Arts with 20% market share.

Gaming industry is on the verge of a new cycle. Introduction of much awaited next generation consoles like Nintendo Wii and Play Station 3 (PS3), along with the coming holiday season, are likely to put the gaming market on fire.

Take Two is set to offer one of the largest set of games for new consoles, with two games already released, and 18 games in the development stage for PS3. The company is also kicking off its Nintendo Wii offering titled as Major League Baseball. The new titles will not only help increase sales, but with premium pricing to be charged, the titles will positively help to improve the margins.

The year 2007 also looks appealing with usual titles of NBA and NHL, including Fantastic 4 game to be launched along with the movie release, as per the recent licensing agreement with Marvel Comics. However, the real growth will come with the much-awaited launch of Grand Theft Auto 4, which has resulted in the stock reaching the $25 mark, when the earlier version was released in late 2004.

Hence, considering all these factors, Take Two looks like a stock that has lot to grow and a lot to offer.

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Avatar NetscribeGames (36.40) Submitted: 4/18/07 1:25 AM

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Take-Two’s performance has been witnessing signs of improvement. For the three months ended 31 January 2007, its revenues have increased by 5% to $277.3 mn primarily led by strong sales of tiles like Bully, NBA 2K7, The Elder Scrolls IV: Oblivion, and above all the massively successful Grand Thief Auto franchise. The losses of the company also narrowed, declining 26% to $21.5 mn. The reduced software development and R&D expenses and the improved margins acted as the key catalyst for the slender loss.

The company has been in the news of late, but sadly most of time for all the wrong reasons. Let it be stock option backdating or overstated financials scandal, or the allegations about implicit sexual content in its game Grand Theft Auto: San Andreas. All these events created a threat of being de-listed from Nasdaq. However, the recent change of management by the shareholders and most importantly, with the company finally regaining compliance with Nasdaq's listing requirements can be seen as positive news coming after a long time.

So its now time to talk about some business, the margins are expected to stay at the elevated level as a result of high margin titles like GTA: Liberty City Stories and NBA 2K7. While the reduced stock based compensation and closure of some studios will bring in operational efficiency, and further improve the cash flow from operations. However talking about the titles, the new management announced that the latest installment of Grand Theft Auto is on its way for a summer release, and will act as the important catalyst for Take-Two’s growth. While the continued rise in popularity of its sports title can also churn meaningful growth in the coming years. Further, looking at the strong prospects of the games industry and company’s solid record of generating blockbuster titles, it can prove to be a good decision to be a part of Take-Two.

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