Activist investor Carl Icahn cut his stake in video game publisher Take-Two Interactive Software Inc, sending its shares down as the move dampened hopes for a quick company takeover.

Icahn reported an 8.43 percent share stake in Take-Two Interactive as of May 26, according to a Friday regulatory filing. This is down from the 13.7 percent stake he reported on March 19, 2010.

The 75-year-old billionaire investor has pushed for changes at companies such as Genzyme and Yahoo Inc. His lower stake could signal that Take-Two Interactive is no longer a company ripe for a takeover, as some analysts have said in the past.

Icahn remains its largest shareholder. He controls three board seats and could still exert influence, said Sterne Agee analyst Arvind Bhatia.

This doesn't automatically mean the company's not in play. Maybe this means a sale is not imminent but I don't think you can rule out long-term potential, Bhatia said.

He added that Icahn probably sold shares in a bid to diversify his investments and reap some profit. Icahn started buying Take-Two shares when it hovered around $7 per share and now shares are trading higher than $16 per share.

He's more than doubled his money, Bhatia said.

In 2008, Take-Two Interactive rejected buyout offers from Electronic Arts Inc.

The video game publisher has been showing renewed financial health in recent quarters. In February, it posted its first profitable year in nearly a decade without a new release of its video game franchise Grand Theft Auto.

A Take-Two Interactive spokesman said it is not our policy to comment on our shareholders.

Shares of Take-Two Interactive were down 29 cents, or 1.7 percent, to $16.47 on Friday.

(Editing by Gerald E. McCormick; Editing by Derek Caney)

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