Following Take-Two's recent earnings call in which the company unveiled its restructuring plan and acknowledged that upcoming layoffs would represent a "significant percentage" of its workforce, company officials have confirmed the New York office for the 2K Games division is being shut down. The staff, which did not include any development team, are being moved West, although not all of them.
"The 2K New York office will be closed as part of the consolidation of the label's management and other functional operations on the West Coast," PR advisor Ed Nebb told GI.biz. "We have reduced the publishing staff connection with the reorganization, although we have not disclosed the final number of positions affected. It's important to note that the goal of the reorganization is not merely cost-efficiency, but about allowing Take-Two to do what it does best - create great, best-selling games."
With that in mind, as part of Take-Two's overall commitment to selling games that have strong market prospects, 2K Games has also cancelled several unnamed projects that were in the pipeline for release beyond fiscal 2007.
But is all the restructuring and focus on core games and brands merely an effort to maximize efficiency and profitability, or is the new management actually prettying up Take-Two so that it can become an attractive acquisition target? Janco Partners analyst Mike Hickey said in a note sent to GameDaily BIZ that he believes the publisher is indeed preparing itself for an eventual sale.
"We believe management's decision to focus on their core game assets will better position the Company for a potential sale," he commented. "Management is in active negotiations to sell non-strategic assets like their Jack of All games distribution business, close underutilized development studios, and cancel games with less certain financial prospects. It appears the Company is stripping out much of the product diversification effort implemented by prior management and is instead focusing on hit franchises. While a smaller but more powerful list of games for release has the opportunity to drive financial performance to higher levels, it also creates periods of operational volatility as their current franchise portfolio limits consistent releases.
"A narrow portfolio of strong franchises, owned IP, and world renowned development team notorious for owned IP creation, could be an exceedingly powerful asset for a competitive 3rd party developer like Electronic Arts or a large multi-media company like Viacom. While a stripped down operational model would naturally increase their earnings volatility, that earnings volatility could be smoothed out if it was included within a larger portfolio of assets from an acquiring Company."
Hickey also noted that he thinks out of the 2,100 employees at Take-Two, roughly 5 to 15 percent will be cut, resulting in layoffs in the range of 105 to 315 employees.
Via :biz.gamedaily
15/06/07, 07:31
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