What would make Grand Theft Auto publisher Take-Two Interactive revise its yearly earnings downward by an impressive $290 million for the year, just four days after previous guidance? The selling of its distribution business, Jack of All Games.
The company announced today that it was selling off its distribution company to SYNNEX for $43.25 million, putting all of its eggs into the publishing business basket going forward. Take-Two expects more than a quarter billion drop in estimated revenues for the year, a $120 million reduction in the first quarter alone.
That's a big drop. So, why would Take-Two do such a thing?
Publisher CEO Ben Feder says the sale "is consistent with our stated intention to focus our resources on our core business strategy - delivering globally the most innovative and creative interactive entertainment products."
Take-Two purchased Jack of All Games in 1998. The sale of the distribution arm to Synnex will mean a "small" loss for the publisher, with yearly revenue dropping from an expected $1.0-1.2 billion to $710-910 million.