Has Take-Two Found A New Path?

For quite some time it has been easy to figure out how Take-Two Interactive Software (Nasdaq:TTWO) would do in a given year. All an investor had to do was check and see if there would be a release in the Grand Theft Auto franchise; if so, assume profits, and if not, assume losses. That sort of reliance on a single brand is seldom good news for a company, and it has been no exception for Take-Two. The question raised by this fiscal year, though, is whether the old truths about Take-Two may need some reexamination and reconsideration. 

A Surprisingly Good Quarter
Take-Two closed out its fiscal year with something of a bang. Revenue rose 32% to $374 million - handily beating both the average estimate of $325 million and the high-water mark for the quarter of $362 million. Growth was actually pretty well balanced this quarter, as Red Dead Redemption and NBA 2K11 made up for the absence of a new GTA release, and the company's catalog delivered solid performance.

Profitability was also much better this time around. Operating profits exceeded $59 million this quarter, which is a far better result than last year's $3 million. Not surprisingly, the company handily beat analyst earnings expectations. Interestingly, this was not only the first year in more than a decade where the company was profitable without a new GTA title, this period also marked profitability for the 2K Sports franchise. 


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