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Ticker Shock: Four Reasons to Not Take-Two


Wednesday's top stories and stocks with potential to move.

I ate more than 11 lollipops last weekend. I generally don't have a sweet tooth, and I'm not a loon. But I came across a stash of what I assumed was old Halloween candy and decided to let er' rip. Turns out, my oldest daughter couldn't find her bag of candy for her class, and I was forced to cop to my mistake. My wife had to buy more lollipops first thing in the morning and drop them off at the school, and now I'm in the doghouse.

Asian stocks rose overnight. The Hang Seng was up 5.26% and the Nikkei was up 1.37%. Meanwhile, European stocks were in the green earlier this morning as well. And here in the US, we're currently trading higher.

Here's what I'm focused on this hump day.

Take-Two Interactive Software (TTWO):
The game publisher was out with its second-quarter numbers.

Excluding items, it lost $0.04 a share. That may not sound so hot, but it was markedly better than the $0.13-a-share loss the Street had been expecting. Meanwhile, revenue came in north of expectations, too.

It would be great if the story ended there, but it doesn't.

Per Reuters:

"The company reaffirmed its forecast for the fiscal year ending October 31 for a profit, excluding items, of nil to $0.20 a share, but lowered its revenue forecast to a range of $1.05 billion to $1.15 billion. It had previously pegged revenue at between $1.1 billion and $1.25 billion."

That's a bit of a downer. In addition, the revenue estimate I'm seeing is for $1.17 billion.

My thoughts:

1. That ratchet down on the revenue could be viewed as a negative by analysts.

2. In 2010, the company is expected to earn $0.94. If it does, that wouldn't be too shabby, but I'm not convinced it will hit that number. Presently, it's expected to earn just $0.12 a share this year, which is doable.

3. Insiders - with the stock in the single-digits, I'd sure like to see some open-market purchases.

4. What's the big catalyst to get involved now?

My gut tells me to punt and see how this plays out (pun intended).
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No positions in stocks mentioned.

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