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Take-Two Losses Narrow In First Quarter

Against a backdrop of continued investor unrest, publisher Take-Two has released Q1 results narrowing its losses to $21.5 million, and increase its sales slightly to $277.3 million, thanks to GTA: Vice City Stories and other steady-selling titles.
Against a backdrop of continued investor unrest, officials from Take-Two Interactive have released details of the company’s firs quarter results, which saw the publisher narrow its losses to $21.5 million. For the three months ended January 31st, net revenue was $277.3 million, up from $265.0 million at the same time last year. Net loss was $21.5 million, improved from $29.1 million in 2006. The loss figure includes $6.4 million for legal and other professional fees associated with the company’s recent stock option investigation. The best performing titles during the first quarter were named as Grand Theft Auto: Vice City Stories on PSP, as well as NBA 2K7 for the Xbox 360, PlayStation 2 and PlayStation 3, The Elder Scrolls IV: Oblivion for Xbox 360 and College Hoops 2K7 for Xbox 360. The company generated approximately $12.1 million in cash flow from operations in the quarter, bringing the publishers' cash position to $138.2 million at the end of the quarter. As recently promised, the company has managed to file its Form 10-Q on time for the first quarter, after previous filings were delayed by the stock option investigation. During the three months the publisher, and owner of Grand Theft Auto publisher Rockstar Games, also saw publishing and distribution gross margins increase. Operating expenses fell by $10.0 million (around 10 percent) as a result of reduced sales and marketing expenses, the closure of three development studios in 2006 and lower stock-based compensation. However, a recent set of comments from analysts have expressed skepticism over the company's future grwoth potential, with Wedbush Morgan's Michael Pachter commenting: "We think that Take-Two’s flagship franchise, Grand Theft Auto, will continue to generate significant profits, but it is clear that the profit potential from its sports business and from “everything else” will not be realized in FY:07. If the company achieves merely “breakeven” results, profits from GTA will be fully offset by losses from everything else."

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