Activist investor Carl Icahn reported an 11.3 percent stake in U.S. video game publisher Take Two Interactive Software Inc , sending its shares up 3.5 percent.

Icahn and affiliated funds built up their stake in Take Two to roughly 9.1 million shares in recent weeks, according to a regulatory filing with the U.S. Securities and Exchange Commission on Thursday.

The filing said Icahn and other related investors may seek conversations with Take Two representatives about the company, but it did not elaborate.

Separately, Take Two, which publishes the video game Grand Theft Auto, reported a wider quarterly loss because of disappointing sales and high costs and a $137.9 million net loss for the full fiscal 2009 year.

The results for the fiscal fourth quarter were in line with what the company had pre-announced earlier in December, which had been well below Wall Street expectations.

Analysts said that Icahn's move raised the possibility that Take Two, which rebuffed a $2 billion buyout offer from rival game maker Electronic Arts Inc last year, could put the company back in play as a potential acquisition.

While there is plenty of room for a new management team to step in and improve the company's performance, ThinkEquity analyst Atul Bagga said he believed an investor like Icahn might see more upside by trying to force a sale of the company.

Take Two has a number of valuable game franchises, Bagga said, and a relatively modest market cap of $670 million that might make it attractive to large media or technology companies.

Icahn's interest in Take Two comes nearly three years after another group of dissident investors ousted the company's previous management and appointed Strauss Zelnick as chairman to turn the ship around.

Take Two's stock is down roughly 60 percent since Zelnick began his tenure, which has focused on diversifying Take Two's business to lessen the company's reliance on the Grand Theft Auto game franchise.

But analysts said Take Two's performance remains plagued by product delays and budget overruns.

Clearly you have a company that has not been managed optimally yet, said Broadpoint Amtech Analyst Benjamin Schachter.

During Thursday's earnings conference call, executives stressed that improving the company's ability to release games on schedule and with the expected production costs was a top priority.

Zelnick said in an interview on Thursday that the company expected to incur a second consecutive annual net loss in fiscal 2010 as it continued to feel the pressure of weak economic conditions.

He said the company was looking at ways to cut costs, but that it was not planning layoffs.

Shares of Take Two, which fell more than 30 percent earlier in December after it pre-announced its results, were up 3.5 percent at $8.54 after-hours on Thursday.

Carl Icahn was not available for comment. A Take Two spokesman said the company does not comment or speculate on shareholders.

For the fiscal first quarter of 2010, Take Two reiterated its previous forecast of $210 million to $260 million in revenue, with an adjusted loss per share between 40 cents and 50 cents.

Analysts were expecting revenue of $226.6 million, with a 47 cents per share loss, excluding items.

Take Two said its guidance did not include any benefit from potential cost-cutting actions.

(Reporting by Alexei Oreskovic; Editing by Phil Berlowitz)

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