Take-Two; Take-Twelve
Stock Ticker: TTWO
Yesterday after the close, Take-Two Interactive (TTWO) disclosed in a press release that it had received grand jury subpoenas issued by the District Attorney of the County of New York requesting production of documents, covering various periods beginning on October 1, 2001, including those relating to:
-the knowledge of the Company's officers and directors regarding the creation, inclusion and programming of hidden scenes (commonly referred to as "Hot Coffee") in Grand Theft Auto: San Andreas;
-the submission of Grand Theft Auto: San Andreas to the Entertainment Software Rating Board for a rating;
-and the Company's disclosures regarding hot coffee;
-disclosures and presentations by the Company of certain events, including acquisitions, partnering arrangements and earnings results;
-invoices from, payments to, and termination of PricewaterhouseCoopers LLP and retention of Ernst & Young LLP;
-acquisitions by the Company in 2005;
-certain compensation and human resources documents with respect to the Company and certain of its current and former officers and directors;
-AND documents concerning the activities of the Company's Board of Directors and Committees thereof.
In truth this is so broad that it would seem another attempt by hierarchs to bog down a company that they have an issue with. It is no secret that Take-Two is very hated by those who make the rules. The company does put its gamers in roles who are rewarded solely by being deviant and ruthless miscreants, who are hellbent on violence and chaos. The issue to recall is that this is a video game, this is not schooling to go influence America's youth to be chaotic cop killers. The old legal adage was to drown your opponent with paperwork and files; but this looks like the reverse: drown them with demands to produce endless documents. This is highly distracting for any company, and this will be no exception.
What investors need to ask is if this should merit yet another 20% drop in the stock. New York is the one district you don't want after you, but Take-Two has had to fight this on numerous venues from almost everyone under the sun and has been working to rectify its past problems. This is not at all the first witch-hunt and will probably not be the last, but by now the street should be looking at this as an ongoing issue that is expected to have more negative impact. The market is supposed to be a discounting mechanism that knows how to factor in certain events, but this is another example of the street reacting to an event far too many times and with far too much dispair. When does the phrase "enough is enough!" come into play?
Shares of Take-Two have been down as much as 20% this morning. Including the times the company has issued warnings with poor guidance and when they have had regulatory oversight issues like this this looks like the 8th time in the last year or so that the company has had approximately a 10% haircut or more. There is no way to ever say you have seen the last drop or the last dollar down in any blow-up or turnaround, so always keep that in mind before just jumping in and expecting a windfall return. Usually a big gap down in a stock is followed by a lot of ups and downs before it stabilizes. But, when will the street learn to adequately factor in these risks?
Perhaps a new sort of shareholder class action suit should arise out of this. Instead of just suing the company for a stock drop, maybe they should sue the government agencies that issue subpoenas over issues that should have been resolved over 6 months ago. This isn't to slam agencies in general, because we all know that companies acting outside of good faith need to be punished. But when does the punishment for the same infraction stop? Obviously, the answer is not today.
If this sounds like a personal rant or a personal attack, it is not. There are no conflicts to report and we are not incentivized for portraying this in any particular light. Sometimes situations just start to be plain stupid, and this looks just like one of those instances.
Jon C. Ogg
June 27, 2006
Yesterday after the close, Take-Two Interactive (TTWO) disclosed in a press release that it had received grand jury subpoenas issued by the District Attorney of the County of New York requesting production of documents, covering various periods beginning on October 1, 2001, including those relating to:
-the knowledge of the Company's officers and directors regarding the creation, inclusion and programming of hidden scenes (commonly referred to as "Hot Coffee") in Grand Theft Auto: San Andreas;
-the submission of Grand Theft Auto: San Andreas to the Entertainment Software Rating Board for a rating;
-and the Company's disclosures regarding hot coffee;
-disclosures and presentations by the Company of certain events, including acquisitions, partnering arrangements and earnings results;
-invoices from, payments to, and termination of PricewaterhouseCoopers LLP and retention of Ernst & Young LLP;
-acquisitions by the Company in 2005;
-certain compensation and human resources documents with respect to the Company and certain of its current and former officers and directors;
-AND documents concerning the activities of the Company's Board of Directors and Committees thereof.
In truth this is so broad that it would seem another attempt by hierarchs to bog down a company that they have an issue with. It is no secret that Take-Two is very hated by those who make the rules. The company does put its gamers in roles who are rewarded solely by being deviant and ruthless miscreants, who are hellbent on violence and chaos. The issue to recall is that this is a video game, this is not schooling to go influence America's youth to be chaotic cop killers. The old legal adage was to drown your opponent with paperwork and files; but this looks like the reverse: drown them with demands to produce endless documents. This is highly distracting for any company, and this will be no exception.
What investors need to ask is if this should merit yet another 20% drop in the stock. New York is the one district you don't want after you, but Take-Two has had to fight this on numerous venues from almost everyone under the sun and has been working to rectify its past problems. This is not at all the first witch-hunt and will probably not be the last, but by now the street should be looking at this as an ongoing issue that is expected to have more negative impact. The market is supposed to be a discounting mechanism that knows how to factor in certain events, but this is another example of the street reacting to an event far too many times and with far too much dispair. When does the phrase "enough is enough!" come into play?
Shares of Take-Two have been down as much as 20% this morning. Including the times the company has issued warnings with poor guidance and when they have had regulatory oversight issues like this this looks like the 8th time in the last year or so that the company has had approximately a 10% haircut or more. There is no way to ever say you have seen the last drop or the last dollar down in any blow-up or turnaround, so always keep that in mind before just jumping in and expecting a windfall return. Usually a big gap down in a stock is followed by a lot of ups and downs before it stabilizes. But, when will the street learn to adequately factor in these risks?
Perhaps a new sort of shareholder class action suit should arise out of this. Instead of just suing the company for a stock drop, maybe they should sue the government agencies that issue subpoenas over issues that should have been resolved over 6 months ago. This isn't to slam agencies in general, because we all know that companies acting outside of good faith need to be punished. But when does the punishment for the same infraction stop? Obviously, the answer is not today.
If this sounds like a personal rant or a personal attack, it is not. There are no conflicts to report and we are not incentivized for portraying this in any particular light. Sometimes situations just start to be plain stupid, and this looks just like one of those instances.
Jon C. Ogg
June 27, 2006
posted by Jon C. Ogg at 11:13 AM
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