T2 Claims Other Offers But Analyst Says Management Failing to Deliver

June 7, 2008 -

As reported by Silicon Valley Insider, Take-Two Interactive execs claimed in a conference call this week that they have potential suitors other than EA. Forbes speculates that, if such suitors really exist, they might be Activision or Ubisoft.

GP: Personally, I wonder if it might make some sense for Sony to go after Take-Two. That would make the GTA series a permanent PS3 exclusive, supercharge system sales, and they could sell off the rest.

Meanwhile, GameSpot reports that Evan Wilson, financial analyst with Pacific Crest Securities, told investors that once you get past Rockstar, there's not much to like about T2:

Rockstar has supported this organization for too long and it is right to spend every dollar that it can get from Take-Two for keeping the business alive. Unfortunately, management appears to be doing the same thing without it being nearly as deserved.

 

At the same time as its cost structure is deteriorating, management is telling investors that it is the most efficient organization in the business. That simply is not true. Management talks about having a lean sales, marketing, and corporate infrastructure behind its development talent. We disagree with this as well.

Wilson also dinged Take-Two for missing release schedules and recommended that investors take EA's buyout offer before it disappears:

If it appears that virtually every major game has been delayed, you would be correct.

 

It is starting to appear that the company is back to where it started. After the success of Grand Theft Auto [IV], it will be looking at a bloated cost infrastructure relative to its revenue opportunity, which will likely be further muted by game delays and underperformance.

 

We believe that the risk of EA dropping its bid for [Take-Two] is greater than the reward of EA coming back with a modestly higher bid, and we continue to recommend that investors take profits. EA's $25.74 offer is more than fair, in our view.

 


Comments

Re: T2 Claims lucky draw

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Re: T2 Claims Other Offers But Analyst Says Management Failing

YOu should also look at who is bankrolling the firms that these analysts belong to or investments that they hold. THis is the reason why certified financial analysts have taken such a beating since the bubble because not many believe in the veracity of their analysis anymore.

Hell its even more pronounced in teh hardware business where you had these firms solidly backed by Intel and always coming out wiht ridiculous analysis from people who have no idea what the alpha is in the hardware biz.

Remember much of the first and second videogames crashes of the seventies and eighties was precipitated by outrageous financial analysis of what was right for companies when it was so plainly wrong to anyone who could do the statistical and macro analysis of the industry.

And this is coming from someone who is taking the CFA tests and goign for certification. Simply put, do not trust what these analysts say until they produce some data and even then wait for other analysts' data to come in as well.

THis is just more FUD.

Re: T2 Claims Other Offers But Analyst Says Management Failing

Oh... hey Jack. How ya doing? Ya doing ok. That's good. Nice to see you have some free time. So you really had T2 stock. Awesome. I swear you just made my day.

Re: T2 Claims Other Offers But Analyst Says Management Failing

It would be bad if Take2's software went Sony only just as bad as if EA were to have it. Considering how many Playstation 3 titles I have that have major issues with noise on the screen, and audio noise as well (see Condemned 2: Bloodshot), there is certainly a lack of quality somewhere there, and it will only be worse down the line if Take2 doesn't retain it's freedom to develop for both consoles.

---- There is a limit for both politicians against video games, and video games against politicians. http://www.goteamretard.com

Re: T2 Claims Other Offers But Analyst Says Management Failing

Wonder how much EA payed these two "analysts"

Re: T2 Claims Other Offers But Analyst Says Management Failing

Argh, sleep deprivation, it was only one analyst actually quoted in this article, my bad >.>

Re: T2 Claims Other Offers But Analyst Says Management Failing

Delay?

 

Cough, cough, Duke Nukem Forever! Cough, cough

 

 

Re: T2 Claims Other Offers But Analyst Says Management Failing

Forbes (yes the whole magazine and site) and Evan Wilson are idiots, I think that's all that needs to be said. Though T2 certainly is bloated, they have way too many studios spread out. They could certainly either sell or just drop some of the smaller ones and maybe merge a few of the other under performing ones. But not screw with the ones that are doing well.

Re: T2 Claims Other Offers But Analyst Says Management Failing

'If it appears that virtually every major game has been delayed, you would be correct.'

Delays?? In the software release procedure??

 

Unthinkable... It's not like any other company ever do that, look at EA who are trying to buy them, I mean, it's not like Spore has been repeatedly delayed....

Oh wait...

Re: T2 Claims Other Offers But Analyst Says Management Failing

technically, spore never had an offical release date, thus it was never delayed.

however, it's definitly taking a long tome to be released.

Re: T2 Claims Other Offers But Analyst Says Management Failing

True, but it has jumped release seasons from what I recall. I think the original release schedule placed it pre-March 2008, could have misinterpreted it though, I'm not sure whether the schedule actually got moved, or whether people just assumed it would be before March 2008.

Re: T2 Claims Other Offers But Analyst Says Management Failing

Once again, another hack analyst who's frequently completely wrong making controversial statements to get his name published...and he does.  Take-Two's got a lot of problems, there's no question but his arguments are flawed in many ways.  Of course Take-Two's infrastructure costs are high considering they just released the most expensive-to-produce title in industry history and have been opening and acquiring new studios.  This guy doesn't know what he's talking about.

Re: T2 Claims Other Offers But Analyst Says Management Failing

"If it appears that virtually every major game has been delayed, you would be correct."

So they have no idea how the games industry works.

the only reason EA isn't so bad is because 90% of their games are the same and they just need to update some models and ship to stores, its hard to be late when your newest <sports game> <year> only takes 2 weeks to make in the year between releases.

Re: T2 Claims Other Offers But Analyst Says Management Failing

New Rule: Forbes magazine is no longer allowed to talk about the video games industry as if they know anything about it.  MBAs have driven many a game company into the ground, going back to Atari. 

As for the delayed games comment:

"A late game is only late until it' released; a bad game is bad forever." --Shigeru Miyamoto.

Re: T2 Claims Other Offers But Analyst Says Management Failing

Of course, delays aren't bad for the games themselves. They are however bad for the company making those games. Blizzard can survive on the back of Vivendi/World of Warcraft. Take Two itself needs a continous revenue.

Re: T2 Claims Other Offers But Analyst Says Management Failing

Well, Blizzard has historically been able to survive through only releasing really, really good games that have sold well for a very long time (beginning way back at the original Warcraft). The WoW revenue is a much more recent phenomenon.

Re: T2 Claims Other Offers But Analyst Says Management Failing

"If it appears that virtually every major game has been delayed, you would be correct."

And? Game delays aren't particularly unusual, nor do they mean the game is going to suck or something. Take Blizzard for example, practically every game of their has been delayed at some point, but they aren't hurting for success.

Re: T2 Claims Other Offers But Analyst Says Management Failing

"once you get past Rockstar, there's not much to like about T2"

What about 2K?  They have made plenty of good games including the recent hit Bioshock.  Not to mention they used to be the only competition for EA in licensed NFL games.

Re: T2 Claims Other Offers But Analyst Says Management Failing

Excuse me?

I'd prefer a major title have a small delay rather than it ship full of bugs and half finished content. I'd rather not have a spot in the road where cars inexplicably launch 30 feet i nthe air. This anylist obviously has no grasp of how the process works.

-kurisu7885

 
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