Analyst Skewers Take Two

| 9 Jun 2008 12:03

A financial analyst has skewered Take-Two's management, saying its expenses are unchecked and its sports games are unprofitable, and added that the company's should accept EA's bid.

"At the same time as its cost structure is deteriorating, management is telling investors that it is the most efficient organization in the business," observed Pacific Crest Securities Analyst Evan Wilson.

Pointing to Take-Two's own figures, he noted that the company's overhead costs were greater than that of its competitors, such as Activision, Electronic Arts, and THQ.

Wilson also took Take-Two's leadership to task for not making the sports division profitable, and for "not own[ing] up to the fact that it is not the hardware manufacturer's fault that its sports games have not sold."

Even with Grand Theft Auto IV's success, the company will be back to square one with bloated costs and continued development delays, said Wilson.

Wilson also said EA's lowered $25.74 per share offer for Take-Two was still a good one and that not acting on it was risky.

"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," Wilson said, "and we continue to recommend that investors take profits. EA's $25.74 offer is more than fair, in our view."


Disclosure(s): Strauss Zelnick, Chief Executive Officer and Chairman of the Board of Directors of Take-Two Interactive Software, Inc., is the head of ZelnickMedia, an investor in both Take-Two and Defy Media, LLC, our parent company. This article was published without approval or consent of ZelnickMedia or Take-Two.
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