Big news from Take Two Interactive—it's sold five million copies of "Red Dead Redemption" since its May 18 debut. This blows away all projections: analysts expected the company to sell some three million copies in the entire quarter and up to five million copies for the rest of the fiscal year.
(Update: Take Two "sold in" five million copies of games. That's the number of games it has shipped to stores, not the number of games purchased by customers. It is an indication of demand -- consumers can of course fail to purchase the games in the numbers retailers expect. The most important number to Take Two Interactive's bottom line is final sales numbers, which the company doesn't report this early after a game's launch.)
Take Two has a major new franchise and as the company declared on its earnings call, it's more diversified than it's been at any time in company history. Diversification is crucial for a company that was built on the success of a single franchise—"Grand Theft Auto."
The company's stock traded higher after-hours as it issued a forecast for its fiscal third quarter that's better than analysts expected. Take Two projects revenue of between $250m and $300m for the quarter ending in July—analysts had projected $165.4 million in revenue for the period.
The company's projected loss for the quarter is between 10 and 20 cents per share, major progress from the 42 cents-per-share loss the company previously expected. The company also raised its full-year forecast ahead of Wall Street projections.
Take Two's fiscal second quarter profit topped Take Two's targets, despite some analyst concerns that disappointing results for 'BioShock 2' would drag on results. Quarterly revenue grew 54 percent to $268 million from the year-ago quarter. Quarterly EPS came in at 20 cents, up from a 13 cent loss a year ago. Excluding stock-based compensation and other items, earnings were 34 cents per share.
The company delayed one of its upcoming games, "Max Payne 3" from the current fiscal year to 2011, which will impact fourth quarter results. Pacific Crest analyst Evan Wilson said me before earnings today that he expected the company to delay at least one of its four upcoming titles, and that he's carefully watching delays as a potential negative for the company.
But the company said on the earnings call that the success of "Red Dead" speaks to the importance of giving a title "the time it needs to fulfill its potential."
The success of "Red Dead" reinforces the fact that the video game is truly hit driven. NPD group reported that in April videogame hardware and software sales reported double-digit declines. Industry-watchers raised concerns about competition from free online social games and the weak American consumer.
But Activision Blizzard CEO Bobby Kotick told me that if games are great people will buy them. Take Two's CEO Ben Feder says that the retail environment continues to be challenging, but it seems that high-rated, highly-anticipated games will fly off shelves regardless of consumer trends.
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