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Take-Two Sells Distro Biz, Cuts 2010 Forecast

Publisher Take-Two is divesting itself of its distribution arm, Jack of All Games, selling it to business software and services distributor Synnex for $43.25 million -- and adjusting its outlook accordingly.
Publisher Take-Two is divesting itself of its distribution arm, Jack of All Games, selling it to business software and services distributor Synnex. Upon closing in early 2010, the deal is expected to be valued at about $43.25 million -- $36.50 million in cash and up to $6.75 million in certain achievement-based items. Synnex acquires the entire distribution arm from Take-Two, and will continue overseeing distribution of the publisher's titles for North America Jack of All Games customers. CEO Ben Feder says that the sale of the distribution company is part of Take-Two's current plan to "focus our resources on our core business strategy." Analysts had suggested as early as 2008 that Take-Two should sell Jack of All Games. also in 2008, Jack of All Games ceased to handle pick, pack and ship functions for the company as those tasks were assumed by new distribution partner Ditan. Jack of All Games had focused instead on purchasing, sales and customer service. Take-Two says it expects a "small" after-tax loss resulting from the sale, and has changed its first quarter and fiscal 2010 guidance to exclude Jack of All Games. It's lowered its expectations for revenue in first quarter of fiscal 2010 significantly, from $210-$260 million to $90-$140 million, and for the year 2010 to come in $710-$910 million instead of $1.0-$1.2 billion. The company recently announced a $137.9 million loss at the close of its fiscal 2009, and has expressed its intention to help repair its performance by focusing squarely on AAA, core-market video games.

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