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Videogame Stock Roundup: Take Two's Earnings Beat, Sony's Investment in AI, Nintendo's Movie Dreams

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Among the top stories this week, Take Two Interactive Software Inc (TTWO - Free Report) announced its quarterly results. Meanwhile, Sony Corp (SNE - Free Report) announced an investment in a U.S. technology start-up, Cogitai to boost its artificial intelligence (AI) capabilities and Nintendo is apparently venturing into the movie business.

Top Stories this Past Week

1. Earnings: Take-Two Interactive posted solid fourth quarter fiscal 2016 results wherein adjusted earnings of 41 cents per share and non GAAP revenues of $342.5 million easily surpassed the respective Zacks Consensus Estimate of 13 cents and $309 million. However, the company’s revenues were down 20% year over year. The company initiated guidance for the first quarter and fiscal 2017. For the first quarter, Take Two expects non-GAAP revenues of $225 million to $260 million. Non-GAAP loss is expected to be in a range of 30 to 40 cents per share. For fiscal 2017, Take Two expects non-GAAP net revenues in a band of $1.5 billion to $1.6 billion and earnings to range from $1.00 to $1.25 per share. The company’s tepid outlook stems from the fact that revenues from its key offerings like Grand Theft Auto V and Grand Theft Auto Online will eventually start diminishing.

2. Sony is investing in a U.S. technology start-up, Cogitai to give its artificial Intelligence efforts a jumpstart. Founded a year ago, California-based Cogitai’s technology enables machines to learn constantly and autonomously from interaction with the real world.Sony expects the partnership to result in a product/service as early as next year. In due course, the company plans to build its AI business into a major revenue source. Though it is too early to comment on the future of this collaboration, but one thing is for sure that AI along with AR/VR technology is here to stay. Given the lucrative opportunities for the long run, tech behemoths right from Alphabet (GOOGL - Free Report) to Facebook (FB - Free Report) to Amazon (AMZN - Free Report) and Microsoft Corp (MSFT - Free Report) are working on boosting their AI efforts.

3. Japanese video game maker Nintendo is exploring possibilities in the movie making business. As per a Fortune report, Nintendo president Tatsumi Kimishima said the company is looking to get into the movie production business in the next five years but it won’t set up its own studio. Instead, it will collaborate with production companies to make movies. Nintendo is searching for newer ways to grow revenues as its video game business is running into losses.

Performance

The following table shows the price movement of the major video game companies over both the past five trading days as well as the last six months:

 

Company

Last 5 Days

Last 6 Months

ATVI

-0.18%

2.13%

EA

14.95%

3.40%

GLUU

9.73%

-23.69%

MSFT

-0.14%

-6.71%

NTES

14.91%

1.26%

TTWO

6.79%

7.68%

ZNGA

-0.39%

0.40%

 

 

 

 

 

 

 

 

 

 

 

 

 

Over the last five trading sessions, Zynga, Inc. (ZNGA - Free Report) was down 0.39% while Electronic Arts (EA - Free Report) was the highest gainer, up 14.95%.

Over the last 6-month period, Take Two surged the most — nearly 7.68%. We believe that Take Two is well positioned to benefit from higher sales of the digital version of the games, which is also adding to the company’s margins. The company continues to expect growth in digital revenues and increases in recurrent consumer spending.

However, Glu Mobile, Inc. (GLUU - Free Report) was down 23.69% over the same time frame due to underperformance of most of its releases this year. But strong first quarter results, share repurchase authorization and its new Britney Spears and a Taylor Swift game should make investors happy.

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