Analysts' double-take on Take-Two earnings

Industry watchers unveil expectations of BioShock sales, downloadable GTAIV content release date, and new installments of Max Payne and Red Dead Revolver.

Yesterday after the end of the trading day, Take-Two Interactive released its quarterly financial report. The publisher touted the success of BioShock, lessened losses compared to the prior year, and expectations of a bright future that included its 2K Sports label turning a profit for the first time next year.

Investors seemed to like what they were hearing, as today the stock has been trading up about 6 percent from yesterday's closing price of $15.75. However, a handful of analysts expressed reservations about the numbers. Wedbush Morgan Securities' Michael Pachter questioned why the company left its sales guidance unchanged despite the performance of BioShock, Manhunt 2's arrival on the last day of the company's fiscal year (October 31), and other good news from management regarding its sports label and profitable distribution subsidiary Jack of All Games.

"We are hard pressed to explain how the company will manage to generate an expected $112 million in pro forma operating losses during fiscal year 2007," Pachter told investors in a note today. "The implication is that the rest of Take-Two's business is a black hole, with losses of $112 million on approximately $400 million in other revenue."

Nollenberger Capital Markets analyst Todd Greenwald was similarly dubious of Take-Two's math, but his note to investors suggest a different reason for the flat earnings guidance. "Despite the addition of Manhunt 2 and the encouraging release of Bioshock in August, management did not raise guidance for the October quarter, leaving it at $275 to $300 million," Greenwald wrote. "We continue to believe that Bioshock's financial success will be somewhat limited by the hardcore scope of the game."

Pachter also noted that Take-Two has reclassified revenue related to the release of its Xbox 360 Grand Theft Auto IV episodic content as "long term," which he said implies a release sometime in the fourth quarter (August through October) of Take-Two's fiscal 2008. In his own note, Pacific Crest Securities' Evan Wilson wrote that he expected the Grand Theft Auto IV episodic content to arrive in the company's third quarter (May through July) of fiscal 2008.

Wilson also delved a little deeper into BioShock, following up on Take-Two's acknowledgement that the game has shipped 1.5 million copies already.

"We forecast 3 million units in Q4 and 4 million through the January quarter," Wilson wrote, adding, "Given BioShock's enormous initial success, Take-Two will clearly release it on other platforms and create sequels if the market makes sense and if quality would not be compromised. Regardless, we expect a sequel to be released toward the end of fiscal 2009 at the earliest."

Wilson, Pachter, and UBS Investment Research analyst Ben Schachter all had a couple other expectations for fiscal 2009, with each predicting Take-Two to release new installments of Red Dead Revolver and Max Payne during the time frame. While Take-Two didn't announce those games during its conference call yesterday, it has brought the two franchises up regularly as examples of its stable of owned intellectual properties, and CEO Ben Feder said they would return sooner or later.

"In addition to Grand Theft Auto, our roster of $1 million plus wholly-owned brands includes BioShock, Civilization, Midnight Club, Max Payne, Red Dead Revolver, Manhunt and Bully," Feder said. "We fully intend to leverage these products, which are on development cycles that should complement and counterbalance each other."

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Discussion

120 comments
Taegre
Taegre

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jack_sparrow_28
jack_sparrow_28

After readreading this a few times, I'M LOVING IT! NEW MAX PAYNE! HELL YEAH!

Crew_SK
Crew_SK

I expected more info regarding the new Max Payne from this news :|

jimmarn
jimmarn

i just hope the game will release early and not in march.. im so looking forward to this :D

shikovi4ik
shikovi4ik

I would like another max payne game

Sparky2002
Sparky2002

I think they mean the episodic content buddy to be release in the later half of 2008 the game should be release in "Q1" end of December-07 - to - March - 08 sometime

Iceberg04blue
Iceberg04blue

Did anyone catch the part where GTA won't be coming out in March anymore?

Dvorack
Dvorack

Another Max Payne game would be FANTASTIC.

iceblade911
iceblade911

they better make sure the sory from max payne 3 and everything else is good... it'd be too much of a pity for that franchise to fail to live up to it's already high standards...

rosen22
rosen22

max payne 3 would rock

Galzakian
Galzakian

Although it wasn't officially announced, good to hear that Max Payne 3 is going to be made

zux2000
zux2000

R* RULEZ they forgot The amazing game: THE WARRIORS

Sparky2002
Sparky2002

[This message was deleted at the request of the original poster]

Jared_Vegeta
Jared_Vegeta

Woot for Red Dead Revolver and Max Payne sequels. Really, I don't care what the game got rated, western games are fun. Its such an untapped setting.

Hicks_1
Hicks_1

Red Dead, Tons of potential there, Max Payne is over and done with

wargraymon
wargraymon

i thought max payne 2 was suppose to be the last....wish they had more norse referenced in that one, went off the track with the theme. hopefully if they do 3 it'll go back.

Azhar85
Azhar85

It's definitely Max Payne 3..i'll love it...

heroface
heroface

MAX PAYNE 3!!!!!!!!!!!! that's all I need to say about this article... and apparentyl all anyone else has to say too!!! Someone send a link to this page to everyone at rockstar and taketwo!!! so they can see what they've started and bring us what we've all wanted for SO long now... hands up if you play through the old ones occasionally just for satisfaction? anyone?... oh... everyone!!!

lightwarrior179
lightwarrior179

I would simply love to see the third Max Payne part getting released!

balnso
balnso

pleaseeeeeeee do not withdraw these words i read max payne3 was cancelled and i really got shock pleaseeeeeeeeeeee i just finished playing thw 2 parts for the 30 times

jansdman
jansdman

Yes please bring us Max Payne !!!

generaltom
generaltom

Max. Payne. 3. For. Next. Gen. Would. Be. Amazing. *cries*

Hameyadea
Hameyadea

[This message was deleted at the request of a moderator or administrator]

kingman03
kingman03

MAX EFFING PAYNE 3 PLEASEEE!!!

Glordit
Glordit

MAX PAYNE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

MindlessTeef
MindlessTeef

MAX PAYNE!!!!!! Did someone say MAX PAYNE!!!!! ?

rockstarrem
rockstarrem

MAX PAYNE 3!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

VengfulOne
VengfulOne

MAX PAYNE 3 MAX PAYNE 3 MAX PAYNE 3 MAX PAYNE 3 MAX PAYNE 3

ShinAkuma777
ShinAkuma777

so is it a new red dead revolver?? cuz that would be the s***

I_pWnzz_YoU
I_pWnzz_YoU

so does anyone know when GTA IV is coming out approx.

retrofraction12
retrofraction12

this reminded me when i was waiting for star trek : the vulcan mith pc. and they canceled it. i was very sad. then I got into mw4 ( mech warrior 4) and was waiting for five to come out and then microsoft cancelled it for crimpson skys ( wich sucked

jacob-goodlich
jacob-goodlich

thats a great idea lamprey263 ,having jack thompson play a villian in one of the games lol.

Arab-man666
Arab-man666

Good god. I was just looking online, at Max payne 2, and wishing that a 3 would be made. I hope all else goes like this.

lamprey263
lamprey263

I just hope they make Max Payne 3 or Red Dead Revolver 2 something that'll make Jack Thompson's head explode in anger. Maybe make a Jack Thompson villain in one of the games.

HellsingSoldier
HellsingSoldier

I remember hearing about a Red Dead Revolver sequel than got canned but hey, more power to them, I enjoyed the game and as for Max Payne, I just can't wait, just look at Stranglehold and know how great of a game Max Payne 3 can be.

John_Vampire
John_Vampire

Yay, a good Update that i can put in my Major Games Of All Time Union (MGOATunion)

Homerj
Homerj

@geebus From what I gather, the guys at Remedy should be just about to the point of polishing and QA on Alan Wake. Gotta keep those quality devs working.

Kazona
Kazona

Last time I checked, Max Payne 3 was listed as cancelled, which was incredibly dissapointing. I seriously hope it'll return because the first two games were two of the best games I've ever played.

Homerj
Homerj

Given how well the Max Payne mechanics turned out in Stranglehold, T2 cant afford not to bring a new Max Payne to next gen hardware. Max Payne 3 is just begging to get made for PC/360.