LOS ANGELES (Reuters) - New management of Take-Two Interactive Software Inc. (Nasdaq:TTWO - news) said it would cut jobs and costs as the publisher of the popular "Grand Theft Auto" video games on Monday posted its sixth quarterly loss in a row.
Shares rose 1.5 percent following the announcement, which will increase centralization at the company whose management was replaced by dissident investors in March. Take Two said it expects to cut costs $25 million a year by the end of next fiscal year.
The company also named Lainie Goldstein as its chief financial officer. Goldstein had been serving as interim CFO since her predecessor, Karl Winters, resigned in April. She was previously senior vice president of finance.
The fiscal second-quarter net loss was $51.2 million, or 71 cents per share, compared with a loss of $50.4 million, or 71 cents, a year ago. Excluding restructuring costs, the company posted a loss of 41 cents a share.
Revenue fell 22.5 percent to $205.4 million in the quarter ended April 30 from $265.1 million a year earlier, when sales of the role-playing game "Elder Scrolls IV: Oblivion" were especially strong.
Analysts on average were expecting revenue of $204.5 million, according to Reuters Estimates.
For the last two years, New York-based Take Two has been mired in regulatory and legal wrangles stemming from stock options practices and sexual content in one of its "Grand Theft Auto" games.
Investors ousted Chief Executive Paul Eibeler and most of the company's directors in March, and in April the U.S. Securities and Exchange Commission said it launched a formal investigation into its past stock option grants.
Nevertheless, the company said it would break even in fiscal 2007, before accounting for charges related to its restructuring. It also expects revenue of $1.2 billion to $1.25 billion for the year, in line with analysts' estimates.
Take-Two Chief Executive Ben Feder told investors on a conference call on Monday that the video game publisher was in talks about alternatives for its Jack of All Games distribution business and Joytech gaming accessories unit. Feder added that the company would keep supporting those units.
Feder also said video game publishing would be Take-Two's primary focus going forward. Take-Two's primary publishing businesses include "Grand Theft Auto" maker Rockstar Games, 2K and 2K Sports and Global Star Software.
The next installment of "Grand Theft Auto" is due to hit store shelves later this year.
The company said it had restructured international marketing, studio administrative functions and consolidated management, marketing and business development operations of the 2K and 2K Sports labels on the West Coast.
Executives declined to say how many of its 2,100 employees would be cut in the restructuring, but said the moves would be significant.
Wedbush Morgan analyst Michael Pachter estimated that the company would cut about 200 positions, but said it may take time for the layoffs to be completed.
"I'm not expecting a whole big impact in fiscal '08. I don't think they really said anything today that was positive enough to drive the stock higher," Pachter said.
Take-Two plans to take $15 million in charges related to the restructuring through fiscal 2008. Half of those charges will be recorded this year.
Take-Two shares rose to $19.22 in after-hours trade after closing at $18.94 on Nasdaq. The stock has dropped about 10 percent since the new management was installed on March 29.
(Additional reporting by Peter Henderson)
Shares rose 1.5 percent following the announcement, which will increase centralization at the company whose management was replaced by dissident investors in March. Take Two said it expects to cut costs $25 million a year by the end of next fiscal year.
The company also named Lainie Goldstein as its chief financial officer. Goldstein had been serving as interim CFO since her predecessor, Karl Winters, resigned in April. She was previously senior vice president of finance.
The fiscal second-quarter net loss was $51.2 million, or 71 cents per share, compared with a loss of $50.4 million, or 71 cents, a year ago. Excluding restructuring costs, the company posted a loss of 41 cents a share.
Revenue fell 22.5 percent to $205.4 million in the quarter ended April 30 from $265.1 million a year earlier, when sales of the role-playing game "Elder Scrolls IV: Oblivion" were especially strong.
Analysts on average were expecting revenue of $204.5 million, according to Reuters Estimates.
For the last two years, New York-based Take Two has been mired in regulatory and legal wrangles stemming from stock options practices and sexual content in one of its "Grand Theft Auto" games.
Investors ousted Chief Executive Paul Eibeler and most of the company's directors in March, and in April the U.S. Securities and Exchange Commission said it launched a formal investigation into its past stock option grants.
Nevertheless, the company said it would break even in fiscal 2007, before accounting for charges related to its restructuring. It also expects revenue of $1.2 billion to $1.25 billion for the year, in line with analysts' estimates.
Take-Two Chief Executive Ben Feder told investors on a conference call on Monday that the video game publisher was in talks about alternatives for its Jack of All Games distribution business and Joytech gaming accessories unit. Feder added that the company would keep supporting those units.
Feder also said video game publishing would be Take-Two's primary focus going forward. Take-Two's primary publishing businesses include "Grand Theft Auto" maker Rockstar Games, 2K and 2K Sports and Global Star Software.
The next installment of "Grand Theft Auto" is due to hit store shelves later this year.
The company said it had restructured international marketing, studio administrative functions and consolidated management, marketing and business development operations of the 2K and 2K Sports labels on the West Coast.
Executives declined to say how many of its 2,100 employees would be cut in the restructuring, but said the moves would be significant.
Wedbush Morgan analyst Michael Pachter estimated that the company would cut about 200 positions, but said it may take time for the layoffs to be completed.
"I'm not expecting a whole big impact in fiscal '08. I don't think they really said anything today that was positive enough to drive the stock higher," Pachter said.
Take-Two plans to take $15 million in charges related to the restructuring through fiscal 2008. Half of those charges will be recorded this year.
Take-Two shares rose to $19.22 in after-hours trade after closing at $18.94 on Nasdaq. The stock has dropped about 10 percent since the new management was installed on March 29.
(Additional reporting by Peter Henderson)
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