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Take-Two Interactive Software, Inc. (TTWO)
F4Q08 Earnings Call
December 17, 2008 4:30 pm ET
Cindy Buckwalter - Executive Vice President
Strauss Zelnick - Chairman of the Board
Benjamin Feder - Chief Executive Officer, Director
Lainie Goldstein - Chief Financial Officer
Eric Handler - Barclay’s Capital
Mike Hickey - Janco Partners
Benjamin Schachter - UBS
Anthony Gikas - Piper Jaffray
John Taylor - Arcadia
Doug Creutz - Cowen & Company
Heath Terry - FBR Capital Markets
Leo Choi - Pacific Growth Equities
Tom Andrews - BMO Capital Markets
Previous Statements by TTWO
» Take-Two F3Q09 (Qtr End 7/31/09) Earnings Call Transcript
» Take-Two Interactive Software, Inc. F1Q09 (Qtr End 1/31/09) Earnings Call Transcript
» Take-Two Interactive Software, Inc. F3Q08 (Qtr End 07/31/08) Earnings Call Transcript
Thank you. Welcome and thank you all for joining us today for our fourth quarter conference call. Today’s call will be led by Strauss Zelnick, Chairman of Take-Two; Ben Feder, our CEO; and Lainie Goldstein, our CFO. Our team will be available to answer your questions during the Q&A session following our prepared remarks.
Before we begin, I would first like to quickly review our Safe Harbor statement by reminding everyone that the statements made during this call that are not historical facts are considered forward-looking statements under federal securities laws. These forward-looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to us. We have no obligation to update these forward-looking statements. Actual operating results may vary significantly from these forward-looking statements based on a variety of factors. These important factors are described in our press release today and our filings with the SEC, including our 10-K for the fiscal year ended October 31, 2007 and our 10-Q for the interim quarters of fiscal 2008. These documents may be obtained from our website at www.taketwogames.com.
Now I’ll turn the call over to Strauss.
Thanks, Cindy. Good afternoon, everyone. Today we’ll review our financial results for the fourth quarter and we’ll discuss our strategic roadmap, our product lineup, and initial guidance for the coming year. We’ll provide our insights on the economic environment and explain our belief that we’ll well-positioned in these clearly uncertain and challenging times.
I am pleased to announced that Take-Two once again achieved its guidance for the fourth quarter. For the full year, we delivered the strongest revenue and earnings in the company’s history. Our record fiscal 2008 results were driven by the phenomenal success of GTA 4 from Rockstar Games. Other top titles for us this year were Midnight Club Los Angeles, NBA 2K9, Carnival Games, Grand Theft Auto catalog titles, and Sid Meier’s Civilization Revolution.
These strong results reflected the actions we began taking in early 2007 to transform our business. Our initiatives included a sharper and more disciplined focus on building our portfolio of world-class titles, the divestiture or revitalization of non-core businesses, and continued emphasis on becoming more efficient and more cost-effective.
I would really like to highlight today’s announcement that we have entered into new long-term agreements with Rockstar Games’ Sam Hauser, Dan Hauser, and Leslie Benzies, as well as several key additional members of the creative team behind our largest selling franchise, Grand Theft Auto. We are thrilled to begin this new chapter in our successful relationship with Rockstar. This team has been instrumental in the development and success of many of our multi-million unit internally owned franchises. In addition to Grand Theft Auto, they include Midnight Club, Bully, Max Payne, Red Dead Revolver, and Manhunt. Rockstar's talent and creativity are unparalleled in our industry.
We’ve established a new incentive compensation program for the Rockstar Games label that is primarily based on a profit-sharing structure across the entire organization. And we’ve instituted a broad-based long-term equity compensation program as well, including a restricted stock that vests over the term of the agreement. We believe this new partnership meaningfully aligns the interest of our creative teams with those of our stockholders.
Now I would like to offer our perspective on the holiday season and beyond. We’ve always said that entertainment isn't immune to economic downturns and these times are certainly both volatile and challenging. I would describe the prevailing trends for our industry as mixed.
Now, the good news is that videogames continue to be highly sought after gifts this season. Triple A products remain high on consumer’s wish lists and many people believe that these games provide greater entertainment value than other forms of entertainment.
While we’ve seen some holiday promotional pricing, our belief is that Triple A product pricing will largely continue to hold through the holidays and beyond, and many retailers have reported stronger sales for interactive entertainment products in contrast to other categories.
That said, it’s important to remember that consumers of interactive entertainment are as much affected by the economy as our other shoppers, and while Walmart and other discounters have remained relatively strong, the bankruptcy filings of Circuit City in the U.S. and Woolworth’s in the U.K. have contributed to an uncertain atmosphere. In short, broad softness at retail has and probably will continue to have an impact on our industry.
This softness has affected many of our peers and we too are experiencing lower-than-expected overall holiday sales. The outlook for the economy is vastly different today than anyone might have expected this past summer, or even as recently as 45 days ago. So we’ve taken a harder look at our forecast for the next 12 months and we’ve significantly reduced our expectations. As I’ve said before, we see it as our obligation to operate the company profitably on a non-GAAP basis even in a year without a major new GTA release. The initial guidance we are providing today reflects that. Lainie will provide further details on the first quarter and discuss our guidance for fiscal 2009.