May 24, 2011 / 8:31 PM / 7 years ago

Take-Two renews employment deal with Rockstar employees

NEW YORK (Reuters) - Take-Two Interactive (TTWO.O) renewed its employment agreements with key members of the creative team of Rockstar Games, the studio that makes its most successful titles, and reported a loss for the quarter that beat Wall Street expectations.

The company’s shares rose in after-hours trading.

Rockstar Games, led by brothers Sam and Dan Houser, develops Take-Two Interactive’s best-selling games including “Grand Theft Auto,” and “Red Dead Redemption.” The agreement, which was to expire in 2012, was being closely watched by investors.

Chief Executive Strauss Zelnick told Reuters in an interview that the contract with Dan Houser, Sam Houser and Leslie Benzies, key members of the Rockstar studio, would last “several years” and is on similar financial terms as the last agreement. The last contract, which lasted between three and four years, was a profit-sharing agreement.

The publishing label Rockstar Games is currently owned by Take-Two.

The news of a renewed agreement came sooner than expected and should lift the company’s shares as investors become more confident in the quality of future game releases, said Sterne Agee analyst Arvind Bhatia.

“This is a huge deal because one of the biggest concerns around Take-Two was whether these key employees would continue working for them,” Bhatia said.

As consumers turn to games on social networks like Facebook and free online fare, a broad sales slump has hit the video games industry which has forced publishers including Take-Two and its rivals such as Electronic Arts ERTS.O to trim game lineups.

The industry has become more focused on investing heavily in hits. If the company’s best talent had left, it would have hurt the quality of future games at Take-Two, analysts said.

The company also reported a net loss of $22.1 million, or 27 cents per share for its fiscal fourth quarter, which ended March 31, compared with a loss of $9.8 million, or 13 cents per share a year earlier.

On an adjusted basis, it reported a loss of 18 cents per share. Wall Street estimates were for a loss of 39 cents per share, according to Thomson Reuters I/B/E/S.

Revenue for the quarter fell 22 percent to $182.3 million as the video game publisher sold fewer games than a year earlier, when it released “BioShock 2,” a first-person shooter game set that sold well in stores.

Take-Two forecast revenue of $325 million to $375 million for the first quarter ending June 30 and earnings of nil per share to 10 cents per share, which is in line with analysts’ average estimates, according to Thomson-Reuters I/B/E/S.

Shares of Take-Two Interactive rose 1.3 percent in after-hours trading to $16.31.

Reporting by Liana B. Baker; Editing by Tim Dobbyn and Carol Bishopric

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