The bad news, however, is that the loss of $0.52 per share was wider than the loss of $0.41 per share (again, this was an adjusted figure) that was reported in the previous year's comparable period. Take-Two may have sold a lot of copies of Grand Theft Auto IV and Carnival Games, but the publisher needs to do a better of job of controlling costs, as well as expenditures, related to research and development. Now, as everyone knows, making and marketing a video game is an expensive endeavor, not unlike the production and distribution of a big-screen movie. Management basically admits in the release that it is difficult to control costs and make a great game (this is how it is put: "We recognize the challenges of balancing efficiency with creativity"). But they're going to have to find a way, I guess. Every publisher needs to do this. I'm not sure what the answer is. Talent demands a lot of money, and publishers seem to be loathe to fool around with paying them less.

I think Take-Two could be an interesting speculative play at these levels, but it's not my favorite video-game idea, and I do think it is risky. I own Activision Blizzard and I've enjoyed seeing that one break through the $10 level recently. I still like the video-game sector, and I look forward to the day when we see more price cuts from Sony (NYSE: SNE) for its PlayStation 3, Microsoft Corporation (NASDAQ: MSFT) for its Xbox 360, and Nintendo (OTC: NTDOY), who of course probably won't need to cut the price of the Wii for a long time due to the demand for that system. Take-Two right now might be more interesting as a potential takeover candidate, as I mentioned the other day. Understand, though, that such a thesis is not for the investor who likes to play it safe.

I own Activision Blizzard, Microsoft; positions can change without notice.