Take-Two 'More Than Just GTA': Making the Case for a Higher Bid

didn't aaron say yahoo was their biggest holding in another clip? :)

GTA has been a great series, but Take-Two's "creative" accounting practices & their ethics makes this stock risky...

Derek C: Yahoo is their 2nd-biggest holding. - Aaron

Love the game series however I own a PS2 and unless i fork $500 for an xbox or ps3 I can not play the game. Grand Theft Auto 4 was made at a 60 frame rate a second which PS2 cant process. So I believe there are thousands and thousands of people who want the game but in order to buy it they have to spend 600$ including game and console. Like the game but not that much

roger G - The fact you own a PS2 is the only reason you cant play GTA4... not because it cant handle the framerate (which I beleive is not at 60 FPS), but because it is only available for PS3 and XBOX. BTW, a PS3 runs at $399 and Sony sometimes offers $100 off when you apply for a Sony credit card. I got mine for $299.

Atari owned the video world once, anybody got their corp address. These are marketing companies they really can blow up fast. If AE gets TTWO sports games the void in competition will be filled by someone.

If any other game company was releasing a hit as big as GTA, their stock would be skyrocketing right now. Too many analysts are too negative on TTWO based on crap done by prior management teams, and they aren't looking toward the future.

waka waka

you know, I own a wii and i've been waiting for a 1st/2nd person shooter for it that's Da' Bomb

With the release of GTA4, I looked at the EA bid for Take Two again. It's still a numbers game. Literally. EA needs to grow. It's stock has been stalled for the past few years (forget for a minute that company execs have heavy stock option components to their compensation). EA wants to acquire Take Two's revenue (about $1bn) and have that revenue show up in EA finanicals. Since EA has a Forward P/E of approx 30 while Take Two's is approx 16, EA wins big time with an extra 900mm to 1bn in revenue run through it's financial ratios. Is Take Two worth 2 billion? Sure, more too, esp given EA's ratios. If EA can capture the 1 billion in revenue this year and get the huge upswing in it's stock price, I think it's worth more than 2 billion. Even if Take Two's revenues drop in 1/2 after this year, EA will be paid back in 3 years rather than 2. The other hidden factors to consider. First are the gains from acquiring the IP from Take Two. EA does amazingly well at exploiting IP it acquires - at least for the first few years - so we there is more revenue to be had, even when sales of GTA4 drop off. Second is the shift in sports games landscape once EA Sports and 2k Sports are brought together under one roof. $2bn is looking like a bargin for EA. I think Take Two knows it. If EA doesn't get the additional $1bn in revenue from acquiring Take Two...one wonders where it will come from... Activision is too big now.....anyone else thinking "THQ"?

It's a shame watching this because it seems to me, at least, that this manager probably thinks $30 is a fair price for TTWO. He seems to think that FY09 will have smaller earnings than FY08... Newsflash: nearly HALF of GTA4 sales will likely fall into FY09 - and the earnings there will be higher margin because the software development costs will have been expensed in FY08. Not only that ... TTWO will have a ton of cash that they can buyout Gearbox Software, for example, and have a fully owned Borderlands. And then there's Mafia 2, Bioshock 2, Red Dead, Max Payne, GTA downloadable, higher install base etc. etc. The idea that FY09 is going to be a smaller earnings year than FY08 needs to be squashed. Both years will be $2+