EA “Take Two Not A Strategic Priority”

Posted in EA, New IP, Spore, Take-Two, acquisition, by mskaggs on May 7th, 2008

Not that you should believe everything you believe, but www.gamesindustry.biz just posted an article full of quotes by Jeff Brown from EA.

I know Jeff, he’s a good guy and a master at public communication. He also makes some very clear comments (if he was quoted properly) about EA’s mindset about Take Two.

“Take-Two is just not a strategic priority for EA.”

“We think [Take Two’s studios are] really great teams, that they’re creative people, and we would very much like to give them a home and access to our publishing capability, but we just don’t need it.”

Sounds like EA is moving on to “other opportunities”, especially with his comment about all the new IP in development.

Still, developing new successful IP is much harder than simply buying currently successful IP.

Also, there’s still the question of how EA is going to quickly grow revenues another billion or two billion dollars. (Maxis & Spore to the rescue?)

If the Take Two deal does fall through, there should be some interesting acquisition news in the next month or two.

Everyone knows that EA always has multiple irons in the fire right?

EA and Take Two - a $2 billion bargain

Posted in EA, THQ, Take-Two, by mskaggs on May 2nd, 2008

With the release of GTA4, I looked at the EA bid for Take Two again.

It’s still a numbers game.

Literally.

EA needs to grow. It’s stock has been stalled for the past few years (forget for a minute that company execs have heavy stock option components to their compensation).

EA wants to acquire Take Two’s revenue (about $1bn) and have that revenue show up in EA finanicals.

Since EA has a Forward P/E of approx 30 while Take Two’s is approx 16, EA wins big time with an extra 900mm to 1bn in revenue run through it’s financial ratios.

Is Take Two worth 2 billion? Sure, more too, esp given EA’s ratios.

If EA can capture the 1 billion in revenue this year and get the huge upswing in it’s stock price, I think it’s worth more than 2 billion.

Even if Take Two’s revenues drop in 1/2 after this year, EA will be paid back in 3 years rather than 2.

The other hidden factors to consider. First are the gains from acquiring the IP from Take Two.

EA does amazingly well at exploiting IP it acquires - at least for the first few years - so there is more revenue to be had, even when sales of GTA4 drop off.

Second is the shift in sports games landscape once EA Sports and 2k Sports are brought together under one roof.

$2bn is looking like a bargin for EA.

I think Take Two knows it.

If EA doesn’t get the additional $1bn in revenue from acquiring Take Two…one wonders where it will come from…

Activision is too big now…..anyone else thinking “THQ”?