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Take-Two's financial year move "sensible" - analysts

By Alec Meer

Tue 26 Oct 2010 1:15pm GMT / 9:15am EDT / 6:15am PDT

Shift to March means better planning, less volatility, claim Wedbush and Screen Digest

Screen Digest

Screen Digest is the pre-eminent firm of industry analysts that has been covering global media markets...

Industry analysts have praised Take-Two's decision to adjust the end of its financial year by five months.

The publisher's financial 2010 will now draw to a close next March, rather than this November as originally planned.

The change "appears a sensible move," Screen Digest's Piers Harding-Rolls told

"Most other games publishers' financial years finish at the end of March, so aligning to that standard makes it easier for the company to strategically plan in relation to the competition."

"The other big guys all are (or were) on a March 31 fiscal year-end," Wedbush Securities' Michael Pachter agreed. "Activision shifted to December 31 when it merged with Blizzard, as its majority shareholder Vivendi is on a December fiscal year, but Activision would have preferred to remain with a March year-end."

That it was specifically March would also be a benefit to results, both analysts felt.

"As we know the Christmas quarter is so heavily loaded for the traditional games business it also makes sense to have it in the middle of the year, rather than either front or back loading the FY," said Harding-Rolls. "So the move reflects the seasonality of the packaged business as well."

Added Pachter, "A March year-end allows better planning for game releases, and a slip from holiday doesn't devastate financial results, as it falls in the company's fourth quarter instead of the third.

"It's something that they should have done well before, as an October year-end is messy, causing the company to report in the middle of the holidays, and to time their game releases at the very end of the fiscal year, in order to get the benefit of holiday sales in both the year just ending and the year beginning.

"Take-Two was always under pressure to announce its release slate in December, with the following holiday still far away, and it had a poor track record of delivering games on time.

"If a game slips by a few weeks, it devastates earnings in the year ending October and boosts earnings in the year beginning in November."

Added Harding Rolls, "It also means that the company's new financial year planning process does not come smack in the middle of the biggest quarter of the year, which must be a benefit."

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