"Grand Theft Auto" sales top $500 mln in 1st week
NEW YORK (Reuters) - Take-Two Interactive Software Inc (TTWO.O) scored over $500 million in global sales of its criminal action game "Grand Theft Auto 4" in its first week, making it one of the most lucrative entertainment launches in history.
The video game publisher is sure to use the strong results, which topped even the most bullish expectations, to strengthen its bargaining position in talks with rival Electronic Arts Inc (ERTS.O), which is trying to buy it for $2 billion, or $25.74 per share.
"When you're negotiating like this it's all about leverage," said Janco Partners analyst Mike Hickey.
"Take-Two couldn't be in a better position. If EA wants to keep their bid at $25.74 and thinks that's a fair price, they are going to have to walk away from this deal," Hickey said.
Take-Two has held off on engaging Electronic Arts until after the "GTA 4" launch, arguing the returns from the game should be a factor in its value.
Take-Two said on Wednesday that "Grand Theft Auto 4" sold about 6 million copies in the week after its April 29 launch, raking in more than $500 million.
Initial sales topped the $300 million for last year's "Halo 3" video game from Microsoft Corp (MSFT.O) and exceeded Hollywood's biggest blockbuster film debut, "Pirates of the Caribbean: At World's End," which raked in $406 million globally in its first six days.
Unit sales were in line with analysts' expectations, but revenue beat even the highest forecasts by about $100 million, reflecting strong demand in Europe, where the game costs more, and high sales of pricier collector's editions.
Daniel Ernst, analyst with Hudson Square Research said the initial sales weren't as important as long-term sales, which he forecast would be 13 million units by the end of the year.
"If you were buying this company four years ago, you were really just buying GTA," said Ernst, who has a $30 price target for Take-Two and sees room for EA to raise its bid.
"Now you're getting this plus four other parts of the business that are fixed, or mostly fixed."
Some analysts doubted the sales would prod EA to offer much more, noting that EA has said it will be a "disciplined bidder" and is willing to walk away.
"I don't think that many people buy the idea that just because you blow the numbers out on GTA, EA is going to come out with a higher bid," said Todd Mitchell of Kaufman Bros, who recently lowered his rating to "hold" from "buy."
Take-Two shares edged slightly higher on Wednesday, rising 4 cents to $26.39. EA shares were up 32 cents to $52.50.
Made by Take-Two's Rockstar studio, the game casts the player as an Eastern European immigrant who runs drugs, shoots cops and knocks off rivals. Critics hailed the game as a brutal and satirical masterpiece.
"Grand Theft Auto IV's first week performance represents the largest launch in the history of interactive entertainment, and we believe these retail sales levels surpass any movie or music launch to date," Strauss Zelnick, chairman of Take-Two, said in a statement.
(Additional reporting by Michele Gershberg in New York and Scott Hillis in Seattle)
