Take-Two sells distribution arm, cuts Q1 forecast by $120 million

The Synnex Corporation sounds like the name of a fictional megacorporation up to no good in a sci-fi film. However, the Fortune 500 company is quite real--and soon to be the new owner of Take-Two Interactive's retail game distribution business.

Today, New York-headquartered Take-Two announced it has sold off its Ohio-based games subsidiary Jack of All Games. As a result, the publisher will receive $43.25 million--$36.50 million in cash and an additional $6.75 million based "the achievement of certain items." However, after taxes, the publisher expects to take a small loss on the sale, which comes one week after a dismal earnings report sparked talk of a shareholder revolt led by investor Carl Icahn.

"The sale of Jack of All Games is consistent with our stated intention to focus our resources on our core business strategy," said Take-Two CEO Ben Feder in a statement.

The buyout is expected to be completed in the first quarter of 2010, and its impact on Jack of All Games' 90 full-time employees is unclear. However, its impact on Take-Two's finances was immediately reflected. This afternoon, the game publisher lowered its earnings estimate for the November-January period, its first fiscal quarter, from $210 million-$260 million to $90 million-$140 million. For its full fiscal year, which ends on October 31, 2010, the company expects revenues of $710 million-$910 million. Previously, the company expected to take in $1 billion-$1.2 billion.

When completed, today's deal will see Synnex become the main retail distributor of all Take-Two games, as well at the third-party titles Jack of All Games previously brought to retail. Based in the San Francisco suburb of Fremont, California, Synnex currently specializes in IT distribution and supply chain management and employs 7,000 people in seven countries. In 2008, its annual revenue topped $7.7 billion, nearly seven times that of Take-Two.