As reported by Barron's, Doug Creutz, analyst for Cowen and Company believes that the likelihood of Microsoft taking over EA is "inconsequentially low." "EA gets over 30% of its revenue from Sony PS2 and PS3 and the Nintendo Wii, which would almost certainly disappear in the event of a Microsoft acquisition, since presumably the whole point of the acquisition would be to secure EA's products as Xbox 360 exclusives. EA gets another 10% of revenue from Sony PSP and Nintendo DS handhelds, which would conceivably be at risk in event of a Microsoft acquisition."
According to the analyst "There is simply no way the math works due to the massive hit to EA's revenue and earnings post acquisition. This is even assuming such a deal would pass regulatory muster, which we find highly doubtful."
EA's shares rose $1.31, or 7.1 percent amid the rumors of the takeover.
Microsoft later released a statement saying the following: "We have no plans to acquire EA. They remain a very important partner to us. No acquisitions."
But MS has abused them in the past, that's why they'd be so up for scrutiny about it
It would hurt EA, as their books would take an immediate 30 - 40% hit. Since the sale of the company would be based on total revenue (Including the above 30 - 40%), it wouldn't be a good deal in the short term. Now, long term I'm sure Microsoft would probably benefit some, but it's too iffy...
Also I don't think it doesn't make sense for MS to own EA what so ever. Over night they would gain exclusive rights to a huge number of franchises, some of them rather big players such as Fifa, Madden, Need For Speed ect. Sure...currently none of those are ones you would base a purchase on but if they were MS exclusives then it gives them a huge leg up over Sony and you could expect at least some of that 30% to shift over to MS's side.
If you believe the possible rumours of Apple taking gaming more seriously on the Mac too then it also would add weight to their PC side by ensuring they retain those franchises (again the sports and Sims ones are big players)
I also think it's unlikely MS isn't working on a handheld to some degree so in a few years time losing sales to the PSP would probably be a non issue if they could again leverage EA to sell their own platform.
Now not saying MS will buy them of course...but it's hardly in the realm of stupidity either. This article seems flawed as it seems too heavily focues on what percentages Sony makes EA currently. Those would obviously change and any aquisition wouldn't be merely to gain their revenue but to also push sales of hardware too.
I think MS learned their lesson with Rare. This will not happen. And BTW most gamers save for blind MS fanboys would see this as a bad new so this would not be a good strategic move by EA.
It would make sense for MS probably if the price would be right. But for EA shareholders not really unless MS buy it for a lot more than what it really worth and EA already worth a good amount of money so ...
MS has shareholders too. We all love video games and all but MS lost a lot of money so far with the XBox console. And Rare invesment has been a bad one. Somewhere along the road all this money spent will need to bring food to the table.
This would be a complicated deal.
Yes, and they would have some very big properties, but on the same token, if EA were not publishing these properties on Sony and Nintendo's consoles, this would open the door to competing brands in a BIG way. They wouldn't be branded, but they could still be quality titles. Also, since they weren't branded, there would be more profit in it as well. Also, exclusivity to one console may make future negotiations for brand exclusivity more difficult.
MS has shareholders too. We all love video games and all but MS lost a lot of money so far with the XBox console. And Rare invesment has been a bad one. Somewhere along the road all this money spent will need to bring food to the table.
I agree with you on the Rare deal, but Microsoft is now using them for other things, like the avatars in XBox Live. I did want to correct you on the XBox losing a lot of money though. It's been making a profit for quite some time now. The original XBox lost money, but that was expected. It no longer is.
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