Dec. 17 (Bloomberg) -- Take-Two Interactive Software Inc., publisher of the “Grand Theft Auto” games, plunged as much as 20 percent in extended trading after profit missed analysts’ estimates and the company projected a loss this period.

The New York-based game publisher also announced in a statement today it reached a new agreement with the creators of “Grand Theft Auto” that will keep them with Take-Two through January 2012.

Profit excluding some costs was 2 cents a share in the fourth quarter ended Oct. 31, missing the 4-cent average of 10 estimates in a Bloomberg survey. Take-Two predicted a fiscal first-quarter loss of 70 cents to 85 cents on that basis, compared with analysts’ projections of a 29-cent profit.

“We don’t think these expectations are anything to write home about,” Chairman Strauss Zelnick said in an interview. “We too are influenced by a very difficult set of economic conditions and the world looks a lot worse than it did just a couple of months ago.”

Take-Two dropped $2.35 to $9.72 in extended trading after the announcement and fell as low as $9.60. The shares rose 1 cent to $12.07 in regular Nasdaq Stock Market trading and have declined 35 percent this year.

The results contrast with comments Zelnick made in an interview on Nov. 3, when he said sales of the company’s video games hadn’t been hurt by the recession.

“With entertainment products, if there’s something you must have, typically consumers are going to buy it,” Zelnick said at the time. “So far, we’re not seeing any negative influence of the overall economy on sales of our titles.”

Sales

Sales in the fourth quarter gained 11 percent to $323.4 million, exceeding analysts’ estimates of $320.3 million. The company posted a fourth-quarter net loss of $15 million, or 20 cents a share, compared with a loss of $7.1 million, or 10 cents, a year earlier.

The results are the first since Take-Two fought off a $2 billion hostile bid from Redwood City, California-based Electronic Arts Inc. in September.

Michael Pachter, an analyst with Wedbush Morgan Securities in Los Angeles, said in a Dec. 15 report that the company’s “Midnight Club: Los Angeles” title was being discounted to $39.99 in stores, a sign that demand “is tepid.”

For all of fiscal 2009, Take-Two projects profit of as much as 20 cents a share excluding some costs on sales of $1.1 billion to $1.25 billion. That compares with analysts’ estimates of $1.26 a share in profit on sales of $1.38 billion.

Few Major Releases

“There aren’t any major releases and ‘Midnight Club’ hasn’t been doing well,” Leo Choi, a San Francisco-based analyst with Pacific Growth Equities, said in an interview.

Some of the company’s most anticipated games, such as “BioShock 2” and “Borderlands,” won’t be out until the second half of the year, Choi said.

“Given all those things are coming in the second half of the year, it becomes a little slow for them,” Choi said.

Securing brothers Sam and Dan Houser, along with Leslie Benzies, with a new contract solidifies Take-Two’s most important source of revenue, said Mike Hickey, an analyst for Janco Partners in Greenwood Village, Colorado. The deal with Rockstar Games’ senior creative team includes profit sharing, officials said on a conference call.

“They have retained the creative geniuses that have allowed them to make the best video games in the world,” Hickey said in an interview. “It should solidify the franchise.”

Non-‘GTA’ Year

Investors will be watching to see how sales fare in a year without a new installment of “Grand Theft Auto” for Microsoft Corp.’s Xbox 360 or Sony Corp.’s PlayStation consoles, said Douglas Creutz, a San Francisco-based analyst for Cowen & Co.

“If they can make money in a non-GTA year that gives them a pathway to a higher stock price,” said Creutz, who spoke before the results came out and rates the shares “outperform.” “The key will be their ability to show they can earn money.”

In addition to “Grand Theft Auto IV,” which allows players to roam the criminal underworld, Take-Two said its fourth-quarter sales were led by the racing game “Midnight Club,” sports title “NBA 2K9,” and family game “Carnival Games.”

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

Last Updated: December 17, 2008 19:01 EST