'Grand Theft Auto' Publisher's Restructuring to Include Layoffs
Take Two Interactive Software, which has had its share of troubles in recent months, is facing more today.
The company confirms it has begun a restructuring, which will include an unspecified number of layoffs.
“As part of Take-Two’s stated goal to maximize the efficiency of our business, we initiated a targeted restructuring of our corporate departments only in order to better align our resources with our current goals,” said Alan Lewis, vice president of corporate communications, in a statement. “Some of these changes were associated with the pending sale of our Jack of All Games distribution business.”
Take Two sold the Jack of All Games distribution division for $43.25 million in late December.
Despite rumors to the contrary, Lewis says there have been no reductions made at the company’s development studios. Asked if cuts at those departments have been ruled out for future phases of the restructuring, he said “we don’t have anything to add to our statement.”
The cuts have given the company’s stock a boost today. Shares were up nearly 5 percent in midday trading.
While the recession has had a broad impact on the video game industry, Take Two has been particularly hard hit, posting a $137.9 million net loss in 2009. The company has issued guidance that it will not be profitable in 2010, despite a high profile slate of titles including the upcoming “Bioshock 2” and “Max Payne 3”.
Meanwhile, activist investor Carl Icahn has been gathering stock in the company. After taking an 11.3 percent ownership interest in Take Two in December, he raised that to 12.3 percent in late January, buying another 1 million shares.
The company has agreed to nominate three of his representatives to the company’s board of directors. They will replace three existing board members, including Ben Feder, who will remain with the company as CEO.
Speculation is rampant once again that the company may be put up for sale, though no clear potential buyer has been identified. Electronic Arts vigorously pursued Take Two in 2007, offering $2 billion. The offer was rejected as inadequate and the stock has never recovered.
Analysts welcome news of the restructuring, but say it’s unclear how much of an impact it will have until Take Two clarifies how deep the cuts are.
“Directionally, it’s good because the reason Take Two swung from a profit in a ‘GTA’ year to losses the next two years is because their costs are too high to support the revenues they get without ‘GTA,’” says Michael Pachter of Wedbush Securities.
“My criticism of this management team isn’t that they’re evil or necessarily stupid, but they came into a business they didn’t understand very well and built an organization to support a level of growth that didn’t occur — and they got caught with their pants down.”