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Earnings Analysis: 
Take-Two Profits Soar, Outlook Disappoints
Author: George Shopov
123jump.com



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Take-Two Interactive Software Inc. announced Thursday a 74% surge in its quarterly income, bolstered by rising sales of its latest Grand Theft Auto videogame. However, the outlook for the next two quarters was below expectations.

 
Take-Two Interactive Software, Inc. (TTWO: chart) reported Thursday that its quarterly earnings soared 74% from a year ago, outpacing analysts’ expectations, driven by surging demand for its Grand Theft Auto: San Andreas game. The video game publisher announced a net profit of $55.2 million, or $1.19 per share, for the first quarter of fiscal 2005 ended January 31. The earnings powered past Wall Street’s consensus forecast of $1.09 per share. For the 2004 corresponding period, the company earned $31.8 million, or 70 cents per share. Quarterly revenue jumped 34% to $502.5 million from $375.5 million, due to strong holiday sales of the latest Grand Theft Auto videogame as well as solid sales of team sports simulators from the company’s 2K Sports unit. Analysts had called for revenue of $452.6 million, on average. Since its release in October, ‘San Andreas’ has sold 12 million units worldwide.

For its second quarter, however, New York-based Take-Two forecast a deeper loss of 20 cents per share, on revenue of $200 million to $210 million. That compares to an earlier guidance of a loss of 10 cents to 20 cents per share, on revenue of $170 million to $190 million. The company said a mix of investment spending and increases in marketing will have a negative impact on results. Analysts had expected a loss of 11 cents per share, on revenue of $182.4 million. For the third quarter, Take-Two pegged earnings at 5 cents to 15 cents a share, also below analysts’ mean estimate of 35 cents a share.

Company shares shed 45 cents on Thursday to $37.42. The stock rose 1.28% to $37.90 in after-hours trading.

Del Monte Foods Company (DLM: chart) of San Francisco, California, posted Thursday a 9.3% drop in its quarterly profits, hurt by higher costs for steel and energy. The food company reported net earnings of $48.5 million, or 23 cents a share, for its fiscal third quarter, down from $53.5 million, or 25 cents a share, last year. Excluding items, profits came to 24 cents a share, in line with analysts’ estimates. Sales for the quarter edged up 6.2% to $861.3 million, aided by price increases and new products.

The stock closed Thursday at $11.03, up 21 cents, or 1.94%.

Fleetwood Enterprises, Inc. (FLE: chart) announced Thursday a third-quarter net loss of $54.7 million, or 99 cents per share, in contrast to a loss of $10.2 million, or 26 cents per share, for the 2004 equivalent. The maker of recreational vehicles and manufactured housing blamed the widened loss on weak dealer demand and litigation costs. The mean analysts’ estimate was for a loss of 59 cents per share. The Riverside, California-based company recorded sales of $564.9 million in the third quarter, a 6% decline year-over-year.

Company shares plummeted 11.71% to close Thursday at $8.75.

Gottschalks, Inc. (GOT: chart) of Fresno, California, on Thursday turned in quarterly income that climbed 6% from a year earlier, helped by lower expenses, which outweighed a drop in sales. The department-store operator said it earned $9.0 million, or 66 cents a share, in its fourth quarter, against $8.4 million, or 64 cents a share, generated for the same period a year ago. Quarterly sales dipped 3.2% to $221.8 million, with same-store sales declining 2.6% from last year. Gottschalks is reviewing its lease-accounting practices, and said that the financial results for the quarter are subject to change, depending on the outcome of the review.

The stock inched down 2 cents to $8.97 at market close Thursday.

Weight Watchers International, Inc. (WTW: chart) said Thursday that its fourth-quarter net profit advanced to $43.2 million, or 41 cents a share, from a prior-year net profit of $38.1 million, or 35 cents a share. The Woodbury, New York-based provider of weight loss services said the 2004 fourth-quarter earnings include the results of its online affiliate and licensee. Without the impact of the consolidation of WeightWatchers.com, the company earned 32 cents a share, meeting analysts’ projections.

Company shares rose 2.05% to close Thursday at $44.33. The stock dropped 33 cents to $44.00 in after-market trade.

Express Scripts, Inc. (ESRX: chart) announced after market close Wednesday a 20% jump in its quarterly earnings, topping analysts’ expectations, boosted by increased use of the company’s mail pharmacy services and higher sales of generic prescription drugs. The St. Louis, Missouri-based pharmacy benefits management company, one of the largest in the U.S., turned in net income of $80.9 million, or $1.08 per share, for the fourth quarter of fiscal 2004, up from $67.4 million, or 87 cents per share, a year earlier. The earnings beat the consensus analysts’ forecast by 2 cents per share. For the quarter ended December 31, revenue advanced 13% to $3.94 billion from $3.49 billion, last year. Express Scripts said its acquisition of CuraScript helped lift the results. For the full fiscal year, the company earned $278.2 million, or $3.64 per share, on revenue of $15.11 billion. That compares to earnings of $249.6 million, or $3.21 per share, on revenue of $13.29 billion, in 2003.

For its first quarter, Express Scripts projected earnings of at least $1.07 per share, which is above the mean analysts’ estimate of $1.04 per share.

The Pep Boys - Manny, Moe & Jack (PBY: chart) of Philadelphia, Pennsylvania, reported before the bell Thursday a wider quarterly loss, hurt by a decline in the gross profit percentage from comparable retail sales. The auto parts retailer posted a net loss of $10.1 million, or 18 cents a share, for its fourth quarter, compared with a loss of $2.36 million, or 4 cents a share, last year. Loss from continuing operations was $9.67 million, or 17 cents a share, for the quarter ended January 29, against a prior-year loss from continuing operations of $5.02 million, or 9 cents a share. On that basis, analysts were looking for a profit of 1 cent per share. Quarterly sales edged up 4.6% from a year ago to $554.1 million.

AutoZone, Inc. (AZO: chart) posted Wednesday second-quarter net income of $119.5 million, or $1.48 a share, which is a 30% increase, compared to year-earlier income of $91.7 million, or $1.04 a share. The Memphis, Tennessee-based U.S. No.1 auto-parts chain said improving sales and a one-time tax benefit boosted the results. Profit, excluding the tax benefit, was $1.29 a share, for the quarter ended February 12, surpassing the average analysts’ forecast of $1.19 a share. Sales for the quarter climbed 3.9% to $1.2 billion from $1.16 billion. Same-store sales were flat.

Costco Wholesale Corporation (COST: chart), the U.S. largest wholesale club operator, said Wednesday that its quarterly profits rose 35% from a year ago, fueled by a tax benefit. However, the results missed Wall Street’s projections, sending the company’s stock down in afternoon trading. Issaquah, Washington-based Costco announced net income of $305.5 million, or 62 cents a share, for its second quarter, in contrast to $226.8 million, or 48 cents a share, for the same period last year. Excluding items, earnings were $263.3 million, or 54 cents a share, a penny shy of the mean analysts’ forecast. Quarterly revenue climbed to $12.66 billion from $11.55 billion, a year ago.
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