Take-Two swings to 3Q profit, sales soar

The company, which is in a nondisclosure agreement with larger rival Electronic Arts Inc. over a potential buyout, earned $51.8 million, or 67 cents per share, reversing last year's loss of $58.5 million, or 81 cents per share.

Adjusted earnings, which excluded stock options expenses and costs related to EA's tender offer (which has since expired) totaled $71.5 million, or 93 cents per share.

Revenue for the three months ended July 31 more than doubled to $433.8 million from $206.4 million.

Analysts, on average, were expecting a profit of 54 cents per share on sales of $381.3 million, according to a poll by Thomson Reuters. This excludes stock options expenses, and analysts typically exclude one-time items from their estimates.

In an interview, Chief Executive Ben Feder called the quarter "outstanding" and emphasized that there was a "lot more" to it than "Grand Theft Auto IV," whose late April launch was the most lucrative in video game history.

The quarter's results were above Take-Two's earlier guidance, and the company said "GTA IV," "Civilization Revolution" as well as the tennis game "Top Spin 3" helped boost results. Nonetheless, Feder called Take-Two's sports business a "mixed bag," as it is not expected to be profitable this year.

Because Take-Two is under a nondisclosure agreement with EA, the company did not give any updates on the potential buyout. EA had offered $2 billion for the New York-based company in February, but Take-Two repeatedly rejected it as too low. In August, EA let a tender offer expire.

Looking ahead, Feder said the company expects a very strong holiday season and, like the rest of the video game industry, it hasn't yet felt the effects of the economic slowdown on its business. While noting that if things get "bad enough for long enough, nothing is immune," he said that although prices of consumer products have been rising, the cost of video games has stayed stable for many years.

For the current quarter, Take-Two reduced its earlier guidance and forecast adjusted earnings of 1 cent to 5 cents per share on sales of $285 million to $335 million. This is below Wall Street's expectations of 19 cents per share in earnings and $350.3 million in sales.