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Take Two, THQ Down 20% in August
by Perry H. Rod,
Published: September 1st, 2010 10:56 AM PDT
With the NASDAQ and Dow Jones Index down 6% and 4%,
respectively, two video game publishers have seen their shares
beaten down to a bloody pulp in the last month – THQ Inc.
(NASDAQ:THQI) and Take Two
Interactive (NASDAQ:TTWO). Competitor
Electronic Arts (NASDAQ:ERTS), meanwhile,
was down 4% in the same period.
THQ issued a weak quarterly update which sent its shares down
beginning in early August. Take Two investors must have been
paying close attention, because Take Two’s plunge occurred
almost in lockstep with THQ shares. Last week, a few THQ
insiders followed up by purchasing shares from the open
market. The market has not since reacted to those modest
sized insider trades.
Take Two investors have not seen a company warning, but have
been nervous about a number of other items, including a recent game
delay and less-than-expected contribution from their new hit title,
Red Dead Redemption. Some are also speculating that the
secretive Rockstar Games studio plans to push the next installment
of Grand Theft Auto into 2012. Others have been disappointed
by recent review scores of their new title, Mafia 2. On top
of that were THQ and Activision’s warnings. Some
investors were also quietly hoping that the less-than-expected
contribution from Red Dead Redemption would be countered by a
positive pre-announcement last month from Take Two management about
earnings. That did not happen. Instead, the company
missed analyst monthly sales expectations for July, which was when
Take Two shares began to slip.
It’s interesting to note that Take Two shares trade at the
same hefty discount to sell side analyst price targets as THQ
shares at this time, suggesting the market holds a similar
pessimistic view on both companies. However, the two
companies could not be in a more different position than they are
in today. Publishers
increasingly admit that they are becoming reliant on a small
handful of blockbuster internal properties with…
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Take Two, THQ Down 20% in
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