Is Take-Two the New Yahoo?

September 16, 2008 -

In failing to accept EA's buyout offer, has Take-Two become the new Yahoo?

Is Strauss Zelnick's position as chairman in jeopardy?

Readers may recall that Yahoo spurned a series of acquisition offers by Microsoft over a five month period earlier this year. If that sounds familiar, Take-Two spurned several EA tender offers over roughly the same time frame.

Microsoft's' interest in Yahoo drove the search firm's stock higher, to the 30 range; Yahoo ultimately stunned Wall Street by refusing MS' 33 per share bid. EA's interest in T2 did the same, pushing TTWO at times into the 26+ range. EA's 25.74 offer remained on the table for months, ridiculed by T2 as undervaluing the GTA publisher.

When MS became frustrated and pulled out, Yahoo stock tanked. Today it wil open at 18.27. On Sunday's news that EA was bailing, T2 plunged 5 points yesterday. Admittedly, some of that might have been helped along by the most brutal day on Wall Street since the 9/11 aftermath.

So why would Zelnick's job be on the line?

It probably isn't - yet. But T2 investors who saw the value of  their shares jump nearly ten points on EA's offer have now given all of those paper profits back with EA's withdrawal. The stock is back where it started. Moreover, a sweetheart deal that would have enriched Zelnick and his management team in the event of an acquisition never sat well with EA. It actually caused EA to lower its tender offer by about 1/4 point and caused bad blood between EA and T2 execs from the get-go.

Now that EA is gone, Zelnick faces some challenges. GTA IV profits are slowing. The Houser brothers will become free agents in February. If they walk, T2 becomes less of a company than it is now. If they stay, T2 will have to pay them a bigger slice of the profits.

We asked Wedbush-Morgan analyst Michael Pachter whether Zelnick might be in jeopardy. His thoughts:

Jeopardy is a strong word. I think that shareholders may be upset that he didn't accept the $26 offer when he had it in hand.  He has some time to demonstrate that there are other interested parties; if he can produce them, I don't think he is in trouble at all.  If he can't, I think that the number of unhappy shareholders will increase.

Financial website The Motley Fool does not see T2 as the new Yahoo, however:

This isn't Microhoo revisited. Take-Two's fundamentals have actually improved since EA went public with its unsolicited offer for Take-Two at $25.74 a share. Grand Theft Auto IV broke records. The BioShock franchise has a sequel on the way, as well as Pirates of the Caribbean director Gore Verbinski on board to give the property the Hollywood theatrical treatment.

 

This is why I believe that Take-Two will bounce back from this a lot quicker than Yahoo! did after its prolonged courtship with Microsoft came up empty... Take-Two shareholders can't blame executives, because those investors perpetually turned down EA's tender offers. The company can also point to its improving fundamentals.


Comments

Re: Is Take-Two the New Yahoo?

Gallagher can araç kiralama say all he wants, but I strongly rent a car believe it's due to his crappy leadership and E3 being a joke. ESA's Board of Directors need to find a way to get out rent a car of this horrid contract with this Bush cronie before there's no one left on the Board.

Btw, I think Atari and Midway will drop out too, but mostly travesti because  these guys have done nothing ttnet vitamin or little and need to start saving costs.

YES.

Now I don't have to get off my ass for the important shit anymore!

Whats next, ordering pizza from Xbox live?

Wait... I think that sounds like a good idea.

But I think voting should MAKE you get off your ass, and see outside or a second while you go vote. I mean, your picking the president of the United States of America for God's Sake... least you can do is drive down there and punch out a card.

 

Re: Is Take-Two the New Yahoo?

I've got to agree, somehow not being bought out by EA will screw over Take 2 in the end.

Kinda like how it should of been Atari/Infogrames publishing GTA 3.

Re: Is Take-Two the New Yahoo?

While I may not really have taken much interest in the EA and TakeTwo merger plans over the last 9 months, I feel glad that this might be all over and done with.

 

<p>

 

On the side note, there was another merger talk or a buyout that happened 6 years ago and it made BIG gaming news, well only in the Nintendo camp.

 

<p>

 

And that was when RARE was sold to Microsoft and Nintendo got their 51% of the share. It all started when it was revealed that the Stamper Brothers who had founded RARE were willing to give up their 49% of their share in the company and they offered it to Nintendo.

 

<p>

 

Many people thought that Nintendo would take the RARE company all to itself but this was back after Conker's Bad Fur Day and while many gamers from Nintendo's N64 were looking forward to the GameCube games from RARE, most people did not realise that the company RARE was hitting hard times with developer teams getting smaller and people and tallent leaving for new jobs and the company was struggeling to make games as fast as they were.

 

<p>

 

That was why Kameo: Elements of Power who started out life as a Nintendo GameCube game took so long to be developed into the launch title of the XBox360 one console generation later.

 

<p>

 

So looking from TTow's position, they are not really in as a bad shape than what RARE was in 2002. So if there is nothing else new about TT, I will think that the house that GTA built will survive independant long after this year to see the next Generation of Consoles to come.

 

<p>

 

but that is just my own opinion thinking here.

 

TBoneTony

 

 

Re: Is Take-Two the New Yahoo?

Lets compare stocks between closings yesterday and a year ago.

TTwo Today: 16.57
TTwo Last Year: 16.47

EA Today: 43.30
EA Last Year: 54.76

The economy is taking a hell of a hurt, and EA has taken a blow compared to last year.  T2 is stable, which in today's market is actually amazing since most companies have dropped at around the rate EA has.  Heck, EA's stock dropped 21% even.

Though I would love to say, woo hoo, EA it getting killed, they are on the market average pretty much.  What has happened is that T2 is doing great no matter what some of these ding bats are saying.  I don't think some of these stock holders know how good they have it unless they are planning for the next few months instead of making it a solid investment for the next 3 years.  If they would have gotten bought by EA, their stock would keep going down if the market keeps going bad, or would stay the same if it goes good, while T2's stock will sky rocket to at least $20 (IMO) if the market balances out. (Which it wont because we have idiots running not only our government, but also the major companies in our country.)

I think EA won't learn there lesson so well from Spore, and will keep pissing off consumers, and their stock will go down in relation to the market because of lacking game sales.  We will know by the end of Nov (since Oct/Nov is their average highest months), if the market finds a balance where it is at now, then EA's stock would typically be at $51 between Oct-Nov as their high.  Which that would only be a slight hint, the big one will be their Christmas time quarterly financial report.  You know EA though, they will find a way to make it sound like they are actually doing good, even if they are half way down the toilet.

Re: Is Take-Two the New Yahoo?

Seems to me EA is to palying with TT hope it will becoem cheap and buy it out when they are desperate.

And if thats you lurking thar Wacko TT is a 3 star dev house that manages to stay aloft with a mix of regurgitation and innovation...and yes its more regurgitation.

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Re: Is Take-Two the New Yahoo?

Yeah... this analysis seems to hinge on the assumption that T2 is supposed to be bought by someone. Yahoo is very different, because it used to be the top of the pack in a very small set of search engines. However, since google hit the scene, Yahoo has pretty much fallen off the map. The idea that T2 and Yahoo are in the same financial, or business situation is just plain wrong. T2 is a thriving company who's stock was artifically inflated by an unsolicited bid. Anyone who is looking at that and seeing it return back to pre-bid value and thinking that's a sign of T2 being in trouble clearly has no concept of the stock market.

Yahoo is a dying company that stupidly rejected an offer to allow them the finances to compete. T2 is a thriving company with multiple very popular franchises that rejected an offer to get eaten by a conglomerate.  

Re: Is Take-Two the New Yahoo?

Take-Two has one star franchise and the Housers are leaving.  Game, set, match. Jack Thompson

Re: Is Take-Two the New Yahoo?

No.

As I read it the Houser brothers are considering leaving, not actually leaving. Or are you only so sure as you plan to harass them into it? It doesn't matter either, whoever picks up Rockstar will get harassed by you then too.

And I'm willing to bet you only see Zelnick as a jerk as you told hi mto cancel GTA4 and he said no.

Re: Is Take-Two the New Yahoo?

Shouldn't you be trying to save your lisence instead of posting on random blogs all day long?

Re: Is Take-Two the New Yahoo?

No they have one franchise that makes the headlines when anyone who played the game looks at someone else funny.

They have a good number of games that provide a steady income that keeps the company well in the black.

E. Zachary Knight
http://www.editorialgames.com
Oklahoma City Chapter of the ECA
MySpace Page: http://www.myspace.com/okceca
Facebook Page: http://www.facebook.com/profile.php?id=1325674091

Re: Is Take-Two the New Yahoo?

Seconded on the EZK game set match.

Re: Is Take-Two the New Yahoo?

Game, set, match. EZK wins.

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I AM DOOMED TO HAUNT JACK THOMPSON'S DREAMS UNTIL HIS CRUSADE AGAINST VIDEO GAMES ENDS.



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Re: Is Take-Two the New Yahoo?

@Pachter's comments

Why does T2 have to sell out? Why can't they simply survive and grow on their own? Obviously a good enough price would make most any businessman sell, and in this case, EA's price simply wasn't good enough for either Take Two's board, or the majority of it's investors. But that a price almost good enough has been offered once by no means suddenly makes it a requirement to find a buyer. People weren't talking about Take Two merging with another company as more than idle speculation before EA made it's offer, and Take Two's only improved in the interim.

-Gray17

Re: Is Take-Two the New Yahoo?

Let me offer an opinion.  First, I'm the only guy in this conversation who has met with Zelnick.  He's a total jerk.  Okay, it takes one to know one, but believe me, he is.  We met on May 15, 2007.  He makes Reverend Jeremy Wright seem like Dale Carnegie.

Secondly, Zelnick's entire strategy was not to run Take-Two, but to gin its value up and then sell it.  That is what he does.  He failed in this.  He played chicken with EA and lost.

It appears that the Housers, by their comments, may indeed wish to bolt the corporate nest, and if so, the T2 stock value will dump down more.

I sold my Take-Two stock at 27.  Glad I did.  And by the way, look at the Forbes article about all this.  Despite all the hype, the sales of GTA IV actually were somewhat disappointing as they fell below estimates.

Good luck to Strauss.  He's going to need it.  Couldn't happen to a nicer guy.  Jack Thompson

 

Re: Is Take-Two the New Yahoo?

He played chicken with EA and lost.

umm, the point of playing chicken is not to budge. The first to budge, in this case EA, is the loser.

I sold my Take-Two stock at 27.  Glad I did.

Admitting yet again to doing this purely for the money eh, vv?

岩「…Ace beats Jack」

岩「…I can see why Hasselbeck's worried about fake guns killing fake people. afterall, she's a fake journalist on a fake news channel」

Re: Is Take-Two the New Yahoo?

 Regardless, he did the right thing. The last thing we need right now is giving EA more power. Plus, I find that many corporate leaders tend to be buttheads, so Zelnick's nothing special.

P.S. You're not JT. Three problems:

1. Your post is too nice. I don't see a single swear word.

2. JT would never admit to buying stock in a company he's trying to destroy.

3. JT wouldn't have encouraged a merger of two major game publishers, especially if would have been a benefit to T2.

Re: Is Take-Two the New Yahoo?

Dude. You were already pointed out as a fake. Stop it.

Re: Is Take-Two the New Yahoo?

I don't recall Strauss Zelnick stepping over still warm bodies to push his agenda on TV without any evidence whatsoever, not even the killer's name.

Strauss may be a jerk, but you are fucking demonic.

Re: Is Take-Two the New Yahoo?

If that were really his purpose, don't you think that he would have sold out when EA offered?

Also, glad to see you remove your conflict of interest. I never understood why you wanted to destroy a company you had investments in.

E. Zachary Knight
http://www.editorialgames.com
Oklahoma City Chapter of the ECA
MySpace Page: http://www.myspace.com/okceca
Facebook Page: http://www.facebook.com/profile.php?id=1325674091

Re: Is Take-Two the New Yahoo?

Amazing how he got the first post, Jack do you have an alarm that goes off whenever there's a story posted here? Perhaps with a few key words? Do you slide down a pole like a fireman or ala the Batman show starring Adam West to get to your computer?

Re: Is Take-Two the New Yahoo?

ROFL-copter  Good one Phoenix!

IMO, I'm also surprised that Jack got first comment on this kind of article. Phoenix, I judge you theory as completely plausible. And I wouldn't be surprised if it were true.

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I AM DOOMED TO HAUNT JACK THOMPSON'S DREAMS UNTIL HIS CRUSADE AGAINST VIDEO GAMES ENDS.



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I AM DOOMED TO HAUNT JACK THOMPSON'S DREAMS UNTIL HIS CRUSADE AGAINST VIDEO GAMES ENDS.
 
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