Wedbush Morgan's Michael Pachter says Take-Two management has "stumbled badly for the first time" with the delay of GTA IV
, and said that he believes difficulties porting the game to the PlayStation 3 are to blame and that the company's new green light policy appears to be a failure.
"We think it is likely," said Pachter, "that the Rockstar team had difficulty in building an exceptionally complicated game for the PS3, and failed to recognize how far away from completion the game truly was until recently."
"We think it is also likely that Take-Two had a contractual commitment to Sony that it would not favor competitor Microsoft by launching the Xbox 360 version of GTA IV
prior to launching the PS3 version," he continued, "and believe that any delay of the PS3 version necessitated a delay of the Xbox 360 version."
The delay has caused somewhat of a valuation quandary for Pachter, as he adds "we are unprepared to predict what Take-Two management can truly deliver until we see some positive results."
"We think that new management is doing many things right," he says, "but believe that some structural obstacles remain. The company has begun an initiative to improve the green light process for new projects, but given the delays of Manhunt
, its process for monitoring projects under development appears to be a failure."
Pachter concludes, "Until we see evidence of better controls over work in process and greater diligence in project selection, we are not confident that the company will gain market share in future years."