Shareholders of Take-Two gather to overthrow the management following a year of financial losses.
Take-Two Interactive, which recently closed its options backdating investigation and faced a sell-off of its shares from investor Carl Icahn, has adjusted its previous four fiscal quarterly reports to accurately portray the company's health. Annual revenue for 2006 reached $1 billion, but fell short of the previous year by $200 million. In addition, the fourth quarter yielded a $14 million loss and news that Take-Two would write off charges of $47 million related to the options case.
Paul Eibeler, Take-Two's president and CEO, told Gamasutra that a major cause of the drop in profits is due to the expensive console transition. "The console transition has been extremely challenging for us. While we are not satisfied with the Company's financial performance in 2006 and the first quarter of 2007, we are confident that our strategic decisions will pay off over the next year and beyond. We strongly believe that the significant financial commitments we have made to next-gen development and our sports business will position Take-Two to leverage the opportunities for our core franchises and sports titles as the hardware install base grows."
Due to the company's poor performance, shareholders have rallied together to form a coup against the current management. Led by SAC Capital Advisors LLC and D.E. Shaw & Co., the alliance holds 46 percent of the company. Six new directors are to be apointed to the board at the annual meeting in New York on March 23, including Strauss Zelnick of BMG Entertainment as Chairman, who is expected to fire Chief Executive Officer Paul Eibeler and possibly Chief Financial Officer Karl Winters. A company-issued internal email reads, "We are pleased that these investors recognize the value that our employees have created in Take-Two and the significant opportunities ahead for us."
Shares of Take-Two Interactive (TTWO) closed yesterday at $19.46, up over 13 percent since the week began.