Reuters earlier today pointed out that shares in publisher Electronic Arts had risen four percent to $19.36 (and it's at $20.12 as of this writing), thanks mostly to speculation indicating a potential buyout by Microsoft. "There's talk that Microsoft might be interested in acquiring Electronic Arts. It's unsubstantiated chatter, but it's out there," Frederic Ruffy, options strategist at WhatsTrading.com, told Reuters, which added that a London-based trader also cited similar talk as making rounds in Europe.
The key word there of course, is unsubstantiated, and when IndustryGamers read the news, we certainly raised an eyebrow. While buying EA would of course strengthen development resources at Microsoft Game Studios, the investment as a whole doesn't make sense if you ask Wedbush Morgan Securities analyst Michael Pachter.
He told us via e-mail, "[It makes] no sense at all. One platform exclusives would likely nullify NFL exclusivity, could kill off all sports and other licenses. EA's value on one platform is probably half its value to a multi-platform buyer (such as a media company)."
Indeed, a media company would be a far likelier bet, and judging by earlier reports today concerning THQ and Take-Two, Viacom, Warner Bros. or other large media conglomerates may be on the hunt.
Update: Now Reuters has updated its own story with another analyst refuting the buyout talk. "Our contacts just don't see Microsoft buying Electronic Arts, no synergies whatsoever, and also not Microsoft's corporate primary focus right now," Trip Chowdhry, an analyst at Global Equities Research said.
1 Comments
September 23, 2009
EA would not be a good value for Microsoft, for the reasons cited. Microsoft might well want to pick up some more game development talent, but they should pick off smaller successful studios (Bungie has been a great buy). Exclusives drive hardware sales, and that is still important... especially since Microsoft is finding more ways to use the 360 to make money.