Despite its recent
$50 million first quarter loss, analysts like Cowen Group's Doug Creutz and Wedbush Morgan's Michael Pachter feel Take-Two's managing its situation well and approaching the coming year conservatively.
"We think that Take-Two’s management has done an admirable job of playing the hand that they were dealt," says Pachter. "When current management took the helm in April 2007, they inherited a company with several strong franchises (
Civilization, Midnight Club and GTA), a money-losing sports business, and several other properties that had been badly mismanaged in the past."
"Game quality has been consistently good, and in part, we believe this is attributable to the hands-off management style of the Take-Two brass."
But Pachter doesn't see much for Take-Two investors to get excited about in the near term, other than the fact that the company's managed to stem the losses of its past.
"We think that
GTA downloads and
GTA on the Nintendo DS are bright spots, but do not have high hopes for outsized contribution from the company’s sports lineup, or from
Don King Prizefighter," says Pachter. "Some titles, like
Red Dead Redemption, Bioshock 2 and
Mafia 2."
Those three games, Pachter says, are expected to sell 900,000 units, 3.1 million units and 1.7 units respectively -- but at no great profit to Take-Two.
"While we wait for the next iteration of
GTA, the company continues to maintain its focus on making the best of the bad situation it inherited," Pachter said. He reiterated his assessment of the company as a "one-hit wonder," although that one hit is "immensely profitable."
"With that said, Take-Two remains only marginally profitable this year," he says. "We think that 2010 will be a huge year for the company, as we think that the next version of
GTA is likely to outsell the prior version by 50 percent, and we think that this can drive company profits higher by a similar amount."
