Banc of America downgrades Take Two to "Sell"

Analysts at Banc of America Securities have downgraded game publisher Take Two from "Neutral" to "Sell", citing an "alarming rate" of cash burn at the firm, which last week saw its audit committee chairwoman Barbara Kaczynski resigning over what she claimed was a poor working relationship between the firm's board and its senior management.

BofA analyst Gary Cooper cited a number of problems with the company in a research note last week, with a key issue being one which has dogged Take Two for several years - namely, its over-reliance on the Grand Theft Auto brand.

Cooper believes that the firm has no solid plans to diversify its line-up beyond the GTA franchise, and also expressed concern over delays to key games and the possibility of more high-level departures in the wake of Kaczynski's resignation.

In a later research note, BofA Securities also played down market speculation over a possible acquisition of Take Two, stating bluntly that "we do not believe that TTWO is a good acquisition or LBO candidate."

"We believe key employee retention, over-dependence on one title, high cost structure, cash burn, and mounting liabilities, are some important reasons why an acquisition of TTWO is highly unlikely," the note continued, going on to state that EA, Activision, THQ, Ubisoft and SCi are all believed to be uninterested in any such deal, while large entertainment conglomerates are more likely to look to other companies in the industry.