Friday, March 04, 2005

Take-Two Interactive Q1 numbers spell trouble?

Take-Two Interactive had a windfall with the continuing success of Grand Theft Auto: San Andreas. According to the first quarter numbers, publishing increased its share as revenue bringer, compared to distribution. GTA is so hot that Take-Two Interactive suddenly has its pockets full of money, apparently not knowing what to do with it. Sure, they say that they are broadening their product portfolio and extending their market reach. All of these are good plans, but take lot of time to materialize. So, we have a situation, where investors are not willing to add the possible future valuation to the Take-Two Interactive share price (stock has gone up, but that is because of the GTA), because it takes more than just announcing the future plans and buying some talent to turn the future potential into reality. Situation has all the ingredients for hostile take-over. Well-managed company with good product slate and fat wallet, also future plans are mapped but still in such a state of infancy that they are easy to chop off if required. With market valuation of about 1,7 billion dollars, which is about half of Activision’s price tag, Take-Two is a snap for a predatory company.
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