Pessimistic Pachter pooh-poohs Take-Two takeover talk

Analyst raises estimates slightly on strength of BioShock, release of Manhunt 2, but says investor confidence is misplaced.

Anyone who has followed the business fortunes of Take-Two Interactive in recent years understands what a rollercoaster ride the publisher has provided for investors. Recently, the company's shareholders got a good scare when the company moved its highly anticipated Grand Theft Auto IV from its previously announced October release to next year.

However, since that time, the company has seen a pair of positive events. A revised edition of Rockstar's Manhunt 2 received an M for Mature rating, and the release of 2K Boston's critically acclaimed BioShock pushed the company's stock price up significantly. In light of the good news, Wedbush Morgan Securities analyst Michael Pachter raised his revenue estimates for the publisher, but cautioned his clients that he still doesn't believe Take-Two is a great investment right now.

"Notwithstanding the likely success of such games as BioShock, the company doesn't appear to be able to make much money from its everyday business," Pachter said. "And as we have said repeatedly, we expect no meaningful change to the business so long as the company continues to produce money-losing sports games."

While Pachter raised his BioShock shipment estimates from 1.3 million copies to 2 million, and factored an initial shipment of 500,000 copies of Manhunt 2 into his projections, he also lowered expectations for a number of other titles. Specifically, Pachter reduced his estimated reorders for Fantastic Four: Rise of the Silver Surfer, All-Pro Football 2K8, Major League Baseball 2K7, and The Bigs, saying those games have combined for only 1.5 million copies sold. Overall, he moved his revenue estimate for the company's fourth fiscal quarter to $300 million, up slightly from $292 million.

Pachter also poked holes in a couple notions about future success for the company. Specifically, he tracked the company's stock surrounding the releases of the three major PlayStation 2 Grand Theft Auto games. While the release of Grand Theft Auto III provided the stock with a boost, neither Vice City nor San Andreas created a disproportionately high return on investment in the publisher.

Pachter also addressed--and dismissed--continued speculation that Take-Two is ripe for acquisition. Specifically, he shot down a theory that Electronic Arts might absorb its longtime rival. He said EA's reserved corporate culture would not mesh well with a company whose biggest games have prominently featured risqué content. He added that EA's track record shows the company's mergers and acquisitions strategy to be on a much smaller scale. In addition to holding back when properties like Juiced, Stuntman, Turok, and all of Eidos were up for grabs, EA's previous console and PC gaming acquisitions covered companies that could be purchased for under $100 million, like DICE, Mythic, and Criterion.

"We remain unprepared to express confidence in Take-Two management until we see some positive results," Pachter said. "We think that new management is doing many things right, but continue to believe that several structural obstacles remain... Until we see evidence of better controls over work in process and greater diligence in project selection, we are not confident that the company will gain market share in future years."

53 Comments

  • Doolum

    Posted Sep 2, 2007 6:06 am GMT

    ahem.!!

  • reverendyates

    Posted Aug 30, 2007 8:35 am GMT

    *yawn*

  • goldeneye_basic

    Posted Aug 29, 2007 8:55 pm GMT

    "Pooh-Poohs"
    LOL!

  • Redsyrup

    Posted Aug 29, 2007 8:03 pm GMT

    I know this sounds ridiculous but so what, I think non-game players buy EA's games and there's more of them than us. If you want original games avoid the EA label.

  • mattster1134

    Posted Aug 29, 2007 4:34 pm GMT

    I wonder if anyone will still buy manhunt 2 now that it is rated M. I mean isnt being extremely violent what made people attracted to it in the first place?

  • fauljosh

    Posted Aug 29, 2007 2:16 pm GMT

    Best. Headline. Ever.

    lol seriously that's hilarious. Very nice alliteration.

  • PXM5000

    Posted Aug 29, 2007 1:42 pm GMT

    I agree with Reaper1117 , EA is not what it used to be

  • StanleyL GameSpot staff member

    Posted Aug 29, 2007 11:20 am GMT

    Good use of alliteration in that headline.

  • lamprey263

    Posted Aug 29, 2007 11:08 am GMT

    If anybody should have Take-Two's IP, it should be Ubisoft.

  • Reaper1117

    Posted Aug 29, 2007 10:52 am GMT

    EA= Death of original games.

    before I start getting hate e-mail about this, let me explain.

    When did EA release a really cool game that wasn't a sequel or made into a sequel, or were sports games. Now yes they have done some good ones, Black for example was a really cool shooter, but we've all seen shooters with the exact same crap in it, Black was just shinnier and louder. Others like Boogie for the wii, is just a crappy waste of 70 bucks. The only company as of late to make orignal games was Clover and they were shut down. and if EA takes Take-Two. Well my friends, we are looking at a global disaster in the game industry that will end all gaming life as we know it.

    ps. I have nothing against EA, I just find they just haven't made a orignal game since PS1

  • ZeroWil

    Posted Aug 29, 2007 10:12 am GMT

    Well, IF EA did buyout Take-Two. They will be able to create the ultimate sports games.

  • peeweeshift

    Posted Aug 29, 2007 8:50 am GMT

    buying criterion was ea's biggest right they ever made. burnout oh sweet are thee

  • ashuncc2

    Posted Aug 29, 2007 8:19 am GMT

    I would loike all developers to be profitable and make great games. But reality is a little tougher. As long as 2k can develop great games, I don't have concerns about the analyst.

  • Andrew0824

    Posted Aug 29, 2007 8:05 am GMT

    jackle2071 said
    "If EA ever bought Take Two, That be the end of GTA...."

    That doesn't make sense. GTA is the only reason anyone would buy Take 2. If they didn't want GTA, what reason would you have for wanting to buy the company? They dont' have any other successful franchises.

  • jackle2071

    Posted Aug 29, 2007 8:00 am GMT

    If EA ever bought Take Two, That be the end of GTA....

  • Homerj

    Posted Aug 29, 2007 7:42 am GMT

    GTAIV is delayed because the developer still cant get it to run properly on the PS3 (ie Madden). End of story there.

  • thatguy0130

    Posted Aug 29, 2007 6:42 am GMT

    Take Two still has some tricks up it's sleeves, but if they lose the "money losing sports games" then who will compete with EA?

  • GruadTheGray

    Posted Aug 29, 2007 6:27 am GMT

    Nice alliteration!

  • Atarii

    Posted Aug 29, 2007 6:02 am GMT

    I don't trust analysts.... sometimes it seems they make up things as they go along, just throwing numbers out there.

  • Riverwolf007

    Posted Aug 29, 2007 5:34 am GMT

    Pachter "Bioshock will sell 1.3 millions copies"..."err umm I meant to say two...two million copies"..."What? It's passed two?..."umm then what I actually meant was..." Nice job to have, when you are off by millions you just have to change your estimates. The rest of us have to do things right the first time. Pachter stands out as a crap analyst in a field dominated by the incompetent .

  • magnusdopus

    Posted Aug 29, 2007 5:21 am GMT

    Call me crazy but I'm pretty sure that GTA IV is coming out next year primarily because of the crowded fall/winter schedule. They have a huge blockbuster in Bioshock. Why compete with your own product for game of the year. While I'm sure the game did take longer than expected, there was no imperative to make a holiday deadline. TTWO's stock falls, but come March, GTAIV should have clear sailing and better shot at game of the year awards.

  • jacob-goodlich

    Posted Aug 29, 2007 2:58 am GMT

    i like how they mentioned gta, it would be nice to get an actual realease date for that game!

  • s9999

    Posted Aug 29, 2007 2:43 am GMT

    is a good game

  • faithnomore311

    Posted Aug 29, 2007 1:22 am GMT

    Alliteration in the title. Cool. 2K makes great games, if EA bought them...thad be really dumb. Boo EA!

  • Miss_Wacy

    Posted Aug 29, 2007 12:32 am GMT

    im getting fed up of this guy

  • Absent_Gambler

    Posted Aug 28, 2007 11:45 pm GMT

    He pooh-poohed it, fatal error! (Long live Stephen Fry)

  • osxgp

    Posted Aug 28, 2007 11:42 pm GMT

    More analyst crap assumptions. I don't know what to think about stocks and what not, but if he suggest that it's a bad time to buy, then I would buy only because people will sell it for cheap. Once GTA IV hits, chances are it might be worth a lot more than you paid. Then again, I have no clue of what I am talking about.

  • Koroshyiaichi

    Posted Aug 28, 2007 11:21 pm GMT

    I knew an officer once, who got pooh-poohed. Made the mistake of ignoring the pooh-pooh.

  • azad_champ

    Posted Aug 28, 2007 11:19 pm GMT

    Great to see that Bioshock is doing well in sales. The funny thing is that EA had the title first but they sold it to 2k

  • Glordit

    Posted Aug 28, 2007 11:13 pm GMT

    Bioshock PC Copy protection shot it self in the foot....

  • selbie

    Posted Aug 28, 2007 10:07 pm GMT

    funny-guy eh?

  • Megawizard1

    Posted Aug 28, 2007 9:48 pm GMT

    Brendan Sinclair needs to work on coming up with article titles that don't sound like they came out of the 20s.

  • Pete5506

    Posted Aug 28, 2007 9:26 pm GMT

    lol to what darknferno12 said

  • jazilla

    Posted Aug 28, 2007 9:25 pm GMT

    yeah....whatever. I do what I want.

  • darknferno12

    Posted Aug 28, 2007 9:23 pm GMT

    I can imagine a T2, EA meeting
    EA: Join the darkside!
    T2: Never!
    *EA chops off T2s hand*
    * T2 jumps down that chute thing you know what i'm talking about you saw the movie*

  • spow

    Posted Aug 28, 2007 9:09 pm GMT

    if i was take2 president i would execute the following actions to increase revenue:
    1- Sell GTA4 gameplay trailers as downloadable content in Xbox live
    2 -Sell GTA4 merchandise right after the trailers 3 -Sell Manhunt in a GTA4 box
    4 - get shothdown in broad daylight by angry gamers and friends alike

  • dQuarters

    Posted Aug 28, 2007 8:29 pm GMT

    I think he's full of it. They're about to sell HUGE amounts of software all over the world from right now and for the next 4 months.

    I would not be so pessimistic.

  • dragonballz3220

    Posted Aug 28, 2007 8:16 pm GMT

    Please dont go down hill EA would **** UP Grand Theft Auto

  • OmegaNemesis28

    Posted Aug 28, 2007 8:06 pm GMT

    What a dirty, dirty world indeed horioricrious. But it is also a very wealthy one too.

  • horioricorious

    Posted Aug 28, 2007 8:00 pm GMT

    Business is a dirty, dirty world.

  • RaiKageRyu

    Posted Aug 28, 2007 7:59 pm GMT

    While BioShock is an extraordinary game, I'm not sure if it's the type of that sells a lot.

    I think on it's own, it probably won't breach double platinum( 2 million).

  • AniFreak

    Posted Aug 28, 2007 7:44 pm GMT

    That is one hell of a headline.

  • VGLeo34

    Posted Aug 28, 2007 7:36 pm GMT

    Dear Microsoft,
    GTA4 is big on your console, in fact huge. But sony's in your way. Here's what you do:
    1. Go to take two offices (New York)
    2. Ask them to think of the biggest number they can think of.
    3. Write that on a check
    4. Give them the check
    Result: a 360 exclusive GTA

  • SeanWithBigBall

    Posted Aug 28, 2007 7:29 pm GMT

    Will this game feature online play between 360 owners and PS3 owners?

  • RedShadowDragon

    Posted Aug 28, 2007 7:27 pm GMT

    Changing the driver every time you hit a bump? I don't think a change in management is going change anything about how many people want to buy & play Take-Two's games. Why don't they just wait for GTA IV & Manhunt 2 to be released before they start analyzing profits? Or should I ask what this news has to do with me, & why it isn't in the business section of a news web site?

  • VegetaMaelstrom

    Posted Aug 28, 2007 7:25 pm GMT

    Aside from Take-Two's upcoming games, if they want to reassure stockholders about the strength of their company, Take-Two had better keep their executives hands out of the proverbial cookie jar (back-dated stock options) from here on out. I mean, is it that hard for highly paid executives not to steal from their own companies (not just at Take-Two but all over Wallstreet)?!?

  • GingeOnGinger

    Posted Aug 28, 2007 7:09 pm GMT

    I Love Take-Two. Some more news on GTA IV please?
    Maybe a lil' trailer?

  • rynmls

    Posted Aug 28, 2007 6:51 pm GMT

    i hope take two will be successful in the future cause they produce great games...

  • ppau08223 posted Aug 28, 2007 6:29 pm GMT (does not meet display criteria. sign in to show)

    ppau08223

    Posted Aug 28, 2007 6:29 pm GMT (hide)

    yeah that articles title is kinda nice, but apart from bioshock im not really interested in any of their games.

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