Investment Blog Bashes Take-Two Boss Zelnick

Take-Two chairman Strauss Zelnick has absorbed something of a beatdown from investor-oriented website Market Rap.

In an article titled No Regrets, No Responsibility, Zelnick is taken to task for what Market Rap writer Perry Rod views as a string of leadership failures on his part. Most egregious among these would appear to be Zelnick’s spurning EA’s $25.74 per share acquisition bid in 2008. Take-Two stock (TTWO) currently trades at 8.58 and has dipped under 6 during the current recession. Rod writes:

If you’re keeping score, in a two year period, Mr Zelnick managed to, on three occasions, make vital statements that were within a matter of weeks proven to be either fabricated or just incredibly incompetent (or worse).  Mr. Zelnick managed to resist and reject a buyout offer that was triple the company’s current share price while claiming other interested parties who never emerged.  And Mr. Zelnick, meanwhile, tripled his management company’s compensation for these efforts…

These statements and others strongly suggest that investors should proceed with extreme caution with any investment that involves Strauss Zelnick.  His performance so far as an executive manager of a publicly traded company  is one of the worst I have ever seen in my professional investment experience.

The Market Rap piece is not the first time Zelnick has come in for harsh criticism from the investment crowd. Last October Mad Money host Jim Cramer added Zelnick to his Wall of Shame.

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22 comments

  1. jedidethfreak says:

    The problem is the board wanted to sell.  EA was the only company that wanted to buy.  As the chairman, it’s his responsibility to field the offer to the board, which he didn’t do.  He just denied it outright.

    Freedom of speech means the freedom to say ANYTHING, so long as it is the truth. This does not exclude anything that might hurt someone’s feelings.

  2. ZippyDSMlee says:

    Yet at the end of the day he managed to keep it out of the hands of EA and IMO thats a good thing.

     


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  3. FlakAttack says:

    Yeah, exactly what I went to go check as soon as I read this. I was going to post it but my power went out and I’ve been busy.

    To sum up everything he just said: EA and T2 have both suffered through the recession and both of them are slowly coming back. Even the percentage lost and speed it came back up is pretty similar.

    The decision made was not necessarily the best for shareholders in the short term, but T2 has the opportunity to do much better in the long term; reputation sells, and T2 has, for the most part, a far better rep than EA… and with the announcement that C&C 4 will require a constant internet connection (so much for no more DRM…), the butchering of the Battlefield series, and the multiple sports game scandals, I don’t think EA is looking so hot right now.

  4. E. Zachary Knight says:

    At there HIGHEST in 2008 just before EA decided they wanted to buy Take Two, Take Two stocks were sitting at 17.08 per share. At the close of 2008 they dropped to 7.95 per share. They are now sitting at 8.61

    So they are about half their value before the EA take over started and have risen since the start of the recession. Considering most every other publicly traded company is suffering in much the same way, I don’t think Take Two has anythingto really worry about.

    Just a quick comparison with EA, in August of 2008 just before all this recession business they were trading at 46.48. Then they plummited to 17.53 at the start of the year and have now risen to 21.42. Much the same pattern as Take Two but without the artificial share price inflation in the middle of 2008

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  5. ecco6t9 says:

    This Zelnick has no idea how to run a company, crooks/morons like him caused this mess in the first place.

  6. DeeJay says:

    EA is not going out of business. They’ve made losses, yes, but they’re still far from going out of business. If you look at the bigger picture pretty much everyone is making losses in the midst of the current economic downturn and assuming that because someone makes a loss, they are going out of business, shows that you know nothing about how business and finance works.

  7. Wormdundee says:

    It’s kind of hard to take you seriously when you say something as ridiculous as EA going out of business.

    Yes, EA lost a ton of money in the last fiscal year. But so did everybody else. They are not going bankrupt anytime soon.

  8. jedidethfreak says:

    Since when is EA going out of business?  This is the first I heard.

    Freedom of speech means the freedom to say ANYTHING, so long as it is the truth. This does not exclude anything that might hurt someone’s feelings.

  9. Vake Xeacons says:

    Not the first, and unfortunately won’t be the last time T2 is bashed for snubbing EA (who, I might add, is going out of business as we speak).

    Unfortunately, I doubt even EA’s complete bankruptcy will turn these Wall Street buttheads around to appriciate T2’s bold decision.

    Zelnick, don’t let those bullies tear you down. You did the right thing fighting peer pressure to stand on your own two feet!

  10. hellfire7885 says:

    EA could have cared less about GTA.

     

    They wanted 2K sports, as EA sports and 2K sports are the two big players when it comes to sports video games, and owning both or having the power to destroy 2K sports would have eliminated competition.


  11. Neeneko says:

    Ahm, he is an investment columnist.  He does not care about the health of a company or industry, only the short term profits of investors.

    Key words, SHORT TERM.  This is the dominant meme of the investment community and has been since the 80s.  Calling it "investment" at this point is a sad joke at best.

  12. jedidethfreak says:

    The problem is, Zelnick was trying to sell the company.  Nobody was interested besides EA, so it doesn’t matter what GTA profits there were, T2 is only worth what people are willing to pay.  EA was the only company willing to pay ANYTHING, therefore T2 really didn’t have a leg to stand on.

    Freedom of speech means the freedom to say ANYTHING, so long as it is the truth. This does not exclude anything that might hurt someone’s feelings.

  13. Magic says:

    What’s the chance that Perry Rod was put up to this by EA? Seriously. Maybe it’s sneaky retaliation from them.

    If not, does he not realise how harmful to the industry it would be if everything was owned by EA? I thought T2s main argument was that GTA4 and Rockstar in general make stupid amounts of profits, so their offer was not remotely considerate with that in mind.

  14. DeusPayne says:

    If you’re keeping score, in a two year period, Mr Zelnick managed to, on three occasions, make vital statements that were within a matter of weeks proven to be either fabricated or just incredibly incompetent (or worse).

    Wait… 3 false statements in 2 years. If anything, that’s a record in the other direction. Most CEOs will make that many blunders in a matter of weeks, let alone over the course of 2 years. 

  15. Icehawk says:

    The evil echo of that idea is that without the stockholders the money to create the games we so enjoy would not be there.   Mind you I agree that our interests and theirs rarely if ever mesh but they are a necessary evil.   Basically into every life shit falls, better not to pick it apart to closely. 

    I also (as many many gamers do) despise EA. 

  16. wintermute says:

    For all it’s worth, as a consumer / gamer, I say screw this "review" and screw the stockholders, all either care about is how much money they’re going to make for themselves, not what their decisions are going to do to the people who buy the company’s products.  No matter the motives, the bottom line is that he kept T2 out of the evil, evil thing that is EA.

  17. jedidethfreak says:

    As I stated above, the real evil Zelnick committed was snubbing EA without the support of the board, and then continuing to try to sell the company.

    Freedom of speech means the freedom to say ANYTHING, so long as it is the truth. This does not exclude anything that might hurt someone’s feelings.

  18. Icehawk says:

    Get the feeling that if Zelnick had agreed to the buyout/merger that he would be getting bashed for "selling-out".  Cannot win for losing.  Or.  No good deed goes unpunished.  

    Tough choice.  Being swallowed by EA (really dont want to go there) of having stock prices drop.. Ponder. 

  19. jedidethfreak says:

    The main reason why they are commenting on the EA thing is because Zelnick rejected the idea without board support, and then tried to market to other companies.  Nobody else made any offer.  It’s like saying "I wanna sell my car.  But not to you.  Anyone else wanna buy a car?"  Not really a smart business decision.

    You are right, though, that comparing the price EA was willing to pay to what the shares are worth now is not a good point.  The only reason I have a problem with Zelnick in this regard is that he outright denied a good offer without consulting the board, then tried to shop the place to others.

    Freedom of speech means the freedom to say ANYTHING, so long as it is the truth. This does not exclude anything that might hurt someone’s feelings.

  20. GoodRobotUs says:

    EA’s shares started at around 50 and now sit at 23, everyone’s share price is dropping.

    I find this whole sell-out to EA commentary quite amusing, because it assumes that Take Two only ever had financial matters to concern themselves with in the agreement, it seems to be attacking Zelnick for not being a cold, money grabbing bastard who took the most profitable route on every occasion.

    Now, while I can understand why that might annoy shareholders on the surface, since we do not know what affect EA taking over Take Two would have had on either the product or the brand itself, there’s no point bemoaning it’s lack of occurence, for all we know, with the current financial climate, it could have broken both companies. This isn’t the kind of financial climate that you want your company taken over in.

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