Electronic Arts (NASDAQ

:ERTS) is set to report earnings after the close and if they have anything good to say, you can bet Take-Two Interactive Software (NASDAQ:TTWO) shares will move seeing how they just hit $6.70 yesterday.  Since Sept 08, shares of TTWO are down 68%, but for how long?  Set em straight Niko.

Grand Theft Auto and Bioshock maker Take-Two pissed off the Street back in December, it was the outlook that killed them.

Take-Two reported a Q4 net loss more than doubled, and it missed the average analyst target back on Dec 17th, the result was a 20% decline in share price.

Take-Two Chairman Strauss Zelnick told Reuters the company “witnessed significant softness” in store sales. That was a shock for investors after total video game U.S. sales rose 10% in November, indicating the industry was weathering the downturn better than most.

Take-Two now expects profit to range between Zero and 20 cents per share for the year ending in October 2009, significantly missing the average analysts’ estimate of $1.21 per share, a huge miss.

The company forecast first-quarter revenue between $175 million and $225 million, below Wall Street estimates of $311 million, as per Reuters Estimates.

But can you trade on the fumes of Electronic Arts?

Only if ERTS has something good to say.

However at $6 and change it may be worth the risk, but we are at the mercy of the analysts and the U.S. economy.

For a video game stock, Take-Two now has a P/E of 5.42 which is decent but also a sign of the times.  Here’s a look at the recent analyst take and based of Take-Two’s 2009 releases, its justified:

A wildcard Take-Two has going for them is Bioshock 2, and if the game does have Multiplayer gameplay, you can bet it will be a big hit.

According to Gamasutra.com’s job listing, the development team is looking for people to help work on Unreal Engine’s networking, and someone to help create the multiplayer experience for PC, PS3, and the Xbox 360.  However, this is speculation and the buzz on the net, but is that enough to take a risk on the stock?

It’s a tough call and for now, I’d rather play the games, then play the stock.

Disclaimer: No positions in any of the securities mentioned in this publication.

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