As a result of submission and approval delays, as well as poor legacy and ongoing sales, publisher Take-Two Software, parent of labels Rockstar and 2K Games has announced a drop in its financial guidance for both fiscal years 2005 and 2006. The announcement came after issues in the submissions process for Grand Theft Auto: Liberty City Stories
' European version caused the game's release to slip from the fourth quarter of fiscal 2005 (ending October 31, 2005) to the first quarter of fiscal 2006 (November 2005 to the end of January 2006).
Other factors in the lowered 2005 guidance include reduced orders for both Take-Two's back catalogue as well as its new releases, which affected both its publishing and distribution arms. Take-Two is forecasting a weaker than expected holiday season as well, due to the launch of new hardware, and has lowered its estimate in that regard as well.
The company is now advising investors to expect around $1.18 billion in net sales for the 2005 fiscal year and $0.53 to $0.56 in diluted net income per share. The lowered estimate comes on the heels of the company's third-quarter results, in which Take-Two had already lowered its estimates
for the year; the new guidance is 18% lower than the $1.4 billion previously expected.
For the 2006 fiscal year, Take-Two is currently predicting $1.35 billion to $1.45 billion in net sales and $1.15 to $1.45 in diluted net income per share. The company also reduced the first-quarter 2006 earnings, due to delays in the company's software: Xbox 360 game The Elders Scrolls IV: Oblivion
will not be out until the second fiscal quarter of 2006 (February 2006 to the end of April 2006), and the Japanese release of Grand Theft Auto: San Andreas
seems to have been moved out of fiscal 2006 altogether, possibly due to recent Japanese controversy
over earlier versions of GTA
, though no reason was given for the delay.
"It is disappointing to reduce our financial guidance," said Take-Two CEO Paul Eibeler. "However, we remain optimistic about Take-Two's overall prospects and the favorable dynamics of our industry. For Fiscal 2006, we are well positioned for the opportunities to extend our brands across the large installed base of current generation platforms, as well as next generation hardware including the two previously announced Rockstar Games titles for the PSP, one of which is a new Grand Theft Auto
title." Following the announcement, Take-Two's stock plummeted in after-hours trading, with shares down 10% to $18.63 after the disappointing news.
[UPDATE: 4.30pm PST - Take-Two specific financial quarter information added to clarify delays.]