When Take-Two Interactive's board of directors was taken over in March by a shareholder revolt, the newly installed management said its first priority would be to address the company's organizational structure. Today the company released financial results of its second fiscal quarter, and announced the first details of a restructuring plan to return the company to profitability.
The publisher listed four primary aspects of the restructuring. Take-Two will consolidate its marketing, sales, and operational functions based on what they do rather than where they are in order. It will also have some label and studio staff--human resources, legal, IT--report directly to the corporate level to increase accountability. The management, marketing, and business development operations of 2K Games and 2K Sports will be consolidated on the West Coast, and Take-Two's third-party PC distribution business will be folded into its North American sales operations.
"While the decisions we are announcing today were difficult and will unfortunately require employee layoffs, we believe these necessary actions will improve the financial and operational performance of Take-Two, leading to greater value for our shareholders," CEO Ben Feder said in a statement.
In an investor conference call after the release of its earnings, Feder said "a significant percentage of our workforce" was going to be laid off, with cuts coming in sales, marketing, and administrative positions.
As for the publisher's quarterly results, Take-Two reported revenue for the three months ended April 30 of $205.4 million, down from $265.1 million in the same time frame last year. Take-Two said it reflected the strength of last year's release of The Elder Scrolls IV: Oblivion, with the shortfall made up partially by sales of Grand Theft Auto: Vice City Stories and Major League Baseball 2K7. The publisher also posted a loss of $51.2 million, slightly worse than the $50.4 million it lost in the same quarter the year before.
In the conference call, Take-Two also squashed recent speculation from Wedbush Morgan Securities analyst Michael Pachter. When asked about Grand Theft Auto IV, executives reconfirmed the October 16 release date for the game, and said the premium edition of the game would arrive "day-and-date" with the bare-bones release. Feder also said he expects that "the release of Grand Theft Auto IV is going to to have a material beneficial impact on sales of the PS3 [hardware]."
The publisher also fleshed out its executive management roster today with the appointment of Lainie Goldstein as the company's chief financial officer. Goldstein had been serving as interim CFO, and previously worked for the publisher as senior vice president of finance.
As of press time, Take-Two Interactive shares were holding steady at $18.94 in after-hours trading.