Thursday, video-game maker Take-Two Interactive Software, Inc. (TTWO) revealed that its fourth-quarter results would trail behind its prior guidance due to weak performance of its baseball games. Anticipated results are also much below current analysts' estimates. Following the news, the company's stock lost about 20% in after hours trading.
For the fourth-quarter ended October 31, 2009, the company expects non-GAAP earnings in the range of $0.05 to $0.10 per share on revenues in the range of $325 million to $350 million. On average, 18 analysts polled by Thomson Reuters currently estimate earnings of $0.33 per share for the quarter on revenues of $370.98 million. Analysts' estimates typically exclude special items.
For the fiscal year ended October 31, 2009, Take-Two estimates a loss in the range of $1.10 per share to $1.15 per share. Revenue for the fiscal year is expected in the range of $950 million to $975 million. On a consensus, 19 analysts presently expect a loss of $0.84 per share for fiscal 2009. Analysts currently expect a consensus revenue of $995.07 million for the year.
Take-Two said it anticipates fourth quarter and fiscal year 2009 results below its prior guidance due to factors such as the performance of its Major League Baseball titles in the fourth quarter. The baseball titles reduced earnings by $0.09 per share, along with an impairment of capitalized software based on sales estimates for its baseball titles in fiscal 2010, representing $0.05 per share.
The company also incurred inventory write downs in its distribution business, primarily related to prior generation software, representing $0.07 per share, and realized lower-than-expected initial performance of several of its key holiday releases.
Additionally, Take-Two expects to record non-cash impairment charges of up to $15 million on its distribution segment on a GAAP basis. This is equivalent to $0.19 per share in the fourth quarter and $0.20 per share for fiscal year 2009. The impairment is in connection with the company's annual assessment of goodwill.
Further, the company said it expects stock-based compensation expense at $0.13 per share during the fourth quarter and $0.34 per share for the fiscal year. The company also expects expenses related to unusual legal matters of $0.09 per share for the full year.
Goodwill impairment charge on distribution segment is estimated at $0.19 per share for the fourth quarter and $0.20 per share for the fiscal year.
Looking ahead, Take-Two revealed a preliminary forecast for the first quarter of fiscal 2010, with a non-GAAP net loss estimated in the range of $0.40 to $0.50 per share on revenues between $210 million and $260 million. Analysts currently expect a loss of $0.26 per share on revenues of $244.21 million for the quarter.
For fiscal 2010, the company expects to report a non-GAAP net loss in the range of $0.40 to $0.60 per share on revenues between $1.0 billion and $1.2 billion. Analysts are currently looking for earnings of $0.64 per share on revenues of $1.24 billion for fiscal 2010.
The company's expected fiscal 2010 results primarily reflect the movement of one triple-A title out of the fiscal year; a non-GAAP net loss from the company's Major League Baseball business in the range of $30 million to $35 million or $0.38 to $0.44 per share; higher development costs for certain titles; as well as the impact of the continued difficult retail environment.
Take-Two's titles planned for launch in 2010 include BioShock 2, Mafia II, Max Payne 3, and Red Dead Redemption. The company said it expects the global release of BioShock 2 on February 9, 2010, and Red Dead Redemption on April 27, 2010. Mafia II is scheduled to release during the first half of 2010 and Max Payne 3 is now planned for release during the fourth quarter of fiscal 2010, Take-Two said.
TTWO closed Thursday's regular trading at $10.92, down $0.39 or 3.45%, on a volume of 1.81 million shares on the Nasdaq. In after hours, the stock is currently trading at $8.78, down $2.12 or 19.41%. In the past 52-week period, the stock trended in the range of $5.56 - $12.81, with an average 3-month volume of 1.89 million shares.
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