Introduction
Take-Two Interactive Software is a publicly traded
company with the symbol TTWO and with annual sales of more than a cool billion.
On September 17, 2013, they released Grand Theft Auto
V for the Sony
Playstation 3 and Microsoft Xbox 360, selling over a
billion dollars in just three days.
The previous record holder was Call of Duty: Black Ops
II by Activision (ATVI) which took 15 days to sell that amount of money.
If you buy shares in the company now, are you going to
retire a wealthy man or woman by 2023 after Grand Theft Auto VII is released?
Let’s find out.
How big is
this business?
There are 16 Software & Programming companies in
the Forbes 2000 list of the leading
companies of the world. We use software every single day of
our lives for a number of things, and that trend is not going to change anytime
soon.
It is likely that the number of companies in this
category will expand to at least 32 in the next quarter of a century. The
software business is a tremendously prominent business.
The heavy hitters in this category are Microsoft and
Oracle with annual profits of over $10 billion each.
Not far behind is SAP from Germany which is currently
worth more than $100 billion.
The smallest of the biggest Software & Programming
companies is Sage Group from the United Kingdom which sells each year $2.2
billion, makes $500 million, has $4 billion in assets, and the company is worth
$6.1 billion as of May 2013.
As you can probably guess, Take-Two Interactive
Software is probably going to sell between $1.74 billion and $2.12 billion this
fiscal year.
We are entering a time period where the game companies
are so big and the profits so massive that the largest companies will have no
choice but to buy them when they are affordable before the price tag is
increased to $6.1 billion which is the cheapest Software & a programming
company that you can buy today.
I don’t know if this company is going to be acquired
by Symantec, Intuit or Adobe in the future, but someone is going to get it.
Acrobat is already installed on hundreds of millions
of computers worldwide, there is nowhere to go, but outside the PC, perhaps
game consoles are the next phase.
We know this is going to happen. The trick is to buy
the game companies today when they are tiny and cheap before they are sturdy
and expensive.
In fact, Electronic Arts (EA) already tried to take
the entire company in 2008 for two cool billions of dollars.
It is only a matter of time before they try to buy it again for three billion before Grand Theft Auto VI is released in a few years.
It is only a matter of time before they try to buy it again for three billion before Grand Theft Auto VI is released in a few years.
Electronic Arts only made $76 million in 2011, and $98
million in 2012 which means Take-Two Interactive Software may purchase them for
three billion in the future. I have faith in Andrew Wilson who was promoted to
CEO this September 17, 2013.
If he fires enough employees, sells some unfinished
games and opens two new software development centers in Mexico and Canada then
he will turn a $200 million profit in 2014, maybe.
Too many things can go wrong. It’s not a bad idea to sell
short EA.
Conclusion
Keep buying shares of Take-Two Interactive Software
which is currently valued at just $1.46 billion including $402,520,000 in the
cash register.
Customers already owe the company $189,596,000 and the
property can be sold and leased back for $25,362,000
In other words, you can buy the Grand Theft Auto brand
right now for about $700 million which is a bargain.
You also get Bioshock, Red Dead Redemption, L.A. Noir
and Max Payne for just $1 per brand.
Sony has a lot of financial problems, and they only
made $457 million last year which means they cannot afford to buy them anymore.
Maybe the new Microsoft CEO will buy Take-Two
Interactive Software in the future.
Author: Alejandro Guillú Mendoza
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