Take-Two slips on "Grand Theft Auto" uncertainty
SAN FRANCISCO (Reuters) - Shares of Take-Two Interactive Software (TTWO.O) slid on Wednesday, despite better-than-expected quarterly results, as investors worried about when the next installment in the blockbuster "Grand Theft Auto" franchise might arrive.
Shares of the game publisher opened higher but dropped steadily throughout the session, closing 7.7 percent lower.
On Tuesday, Take-Two posted a profit that beat Wall Street's targets and raised its forecast for the fiscal year on the heels of strong sales for "Red Dead Redemption.
But the company is still projecting losses in its third and fourth quarters, and it gave no hint as to when it plans to release the next GTA game, which is key to its profitability.
Most analysts expect to see the title arrive next fiscal year, but fears about a delay persist.
"There is a hesitation to own the stock without more information about GTA," said Janco Partners analyst Mike Hickey.
"If we don't hear anything in the next few months, then doubts start to creep in."
The company has struggled with spiraling costs and game delays, and it has vowed to rein in expenses. But the bottom line remains a concern, analysts said.
"They're still not making money; despite a strong top-line performance they're not getting profitability," said ThinkEquity analyst Atul Bagga.
The company's last annual profit came in 2008, when it released the fourth installment of GTA. That game has sold more than 17 million units.
"The company is still projected to lose money in FY10, visibility into FY11 is limited, and while we still have 'Grand Theft Auto V' as a late FY11 release, Take-Two's track record with releasing games on time is cause for concern," MKM Partners Eric Handler wrote in a research note.
Shares of New York-based Take-Two fell 81 cents to close at $9.71 on Nasdaq.
(Reporting by Gabriel Madway; Editing by Richard Chang)
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