Take-Two Interactive, parent company of Grand Theft Auto publisher Rockstar Games and Civilization publisher 2K Games, today announced its preliminary earnings for the third quarter of its fiscal year, which ended July 31. Net revenues for the quarter totaled $240 million, up from $169.9 million for the third quarter of the company's 2005 fiscal year. That three-month period saw the company's earnings hobbled by the recall of Grand Theft Auto: San Andreas in the wake of the "Hot Coffee" scandal.
While the net earnings number would normally be cause for celebration, stockholders' cheers were quickly silenced by a double shot of bad news from Take-Two. First up was the company's announcement that it was delaying its final earnings report due to an ongoing internal investigation into its granting of stock options. Take-Two also revealed it has "received additional grand jury subpoenas issued by the District Attorney of the County of New York requesting documents...regarding stock options and other equity-based compensation."
Were that not grim enough, Take-Two also flatly announced that current estimates by Wall Street analysts about its fortunes were overly optimistic. "Take-Two commented that, independent of any potential financial impact that may result from the company's internal investigation of option grants, the current analyst consensus EPS estimates for its third quarter, and revenue and EPS [earnings per share] estimates for its fourth quarter are too high," it said in a statement. Take-Two blamed regulatory fees, income taxes, and its relocation of its overseas publishing headquarters to Geneva for the shortfall.
That said, the company also gave another reason for its revision--one that will have a much greater immediate impact on gamers. "The company's fourth-quarter results will also be impacted by these factors, as well as the movement of a Rockstar PSP title based on a premier brand out of the fourth quarter," read the report.
Currently, Take-Two's main PlayStation Portable release for its fourth financial quarter, which runs from August to October, is Grand Theft Auto: Vice City Stories. However, the next paragraph touts VCS and Bully for the PlayStation 2 as Take-Two's two top releases for its fourth quarter. Attempts to contact Take-Two regarding the unnamed PSP title's delay had been unsuccessful as of press time.
Needless to say, the markets were none too pleased with the news. Take-Two's share took a Bully-worthy beating in after-hours trading, sliding $1 to $11.20 as of press time.