Take-Two delays "Grand Theft Auto IV"

By Nichola Groom

LOS ANGELES (Reuters) - Take-Two Interactive Software Inc (TTWO.O: Quote, Profile, Research, Stock Buzz) on Thursday delayed its most important upcoming video game, "Grand Theft Auto IV", and warned it would post a full-year loss, before one-time items, sending shares down 17 percent.

"We are very disappointed to reduce guidance after having previously reaffirmed it," Ben Feder, the chief executive who is part of a new management team at the troubled company, said in a statement, referring to the company's previous assessment, in June.

The game, which had been scheduled for release in October, is now planned for release in the second quarter of Take-Two's fiscal 2008. That means it will not be on store shelves in time for the holidays, dealing a blow to Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) and Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz), who had been banking on the must-have title to help lift sales of their respective gaming consoles, the Xbox 360 and the PlayStation 3.

"It's a disappointment that the game won't come out in the holiday period. It's one of the biggest games of all time," said Janco Partners analyst Mike Hickey, who has a "buy" rating on Take-Two shares. "This is probably going to hurt the sell- through of the PS3 and 360."

In the "Grand Theft Auto" franchise, players assume the role of a thug who, by committing various crimes, works his way up to the top of a criminal organization. The game is notorious, however, for its extreme violence, including letting players run over innocent pedestrians or gun down police officers willy-nilly.

The last version of the game, "Grand Theft Auto: San Andreas" came under fire in 2005 after hidden sex scenes were discovered that allowed players to engage in virtual sex acts.

Take-Two Chairman Strauss Zelnick, who helped lead a shareholder coup that ousted the former management earlier this year, said "certain elements of development proved to be more time-intensive than expected, especially given the commitment for a simultaneous release on two very different platforms."

On a conference call with analysts to discuss the delay, executives said the reason for the move was almost strictly due to technological challenges in completing the game.