Rumor: EA Facing Takeover Bid from Korean Giant

[Fell]

The irony of EA getting bought out is just delicious.

 

[Bloodstain]

[HEADING=2]Coming up in 2013:[/HEADING][HEADING=1]Maple Effect![/HEADING]

 

[dyre]

Oh God, not Nexon. I bet this is just a PR stunt by EA to ask gamers "you think we're bad now? Guess what could make things even worse!"

 

[Weaver]

Now all EA games can have 400 hours of grinding in them!

 

[AbstractStream]

The thought of this scares me...

OT; Meh its not like EA can get any worse.

Everytime someone says that, things get worse D:

EA being bought out though (if it were to ever happen)? Ironic indeed.

 

[NinjaDeathSlap]

Well, the big problem with EA right now is that they're financially insecure, which is why everything is so by-the-numbers. They copy other people's ideas because it's less risky than having their own. They rush games out because they don't know if they can afford to delay for too long.

If even just a vague rumour for this is enough to make EA's stock rise by 6%, then I cannot support this bid enough.

 

[SageRuffin]

I just got an image of a weird love-child of Jade Empire and Vindictus [http://www.youtube.com/watch?v=VX3RYqFufUQ]. Hmm...

That is, assuming BioWare remains under EA after this whole ME3 debacle.

 

[Arakasi]

Oh no! If that happened EA would lose all their artistic Integrity...

What?

Thank you for making my day.

OT; Meh its not like EA can get any worse.

You haven't played a Nexon game.

 

[Aeonknight]

I would rather have Battlefield and Mass Defect than another Maple Story.

As bad as EA is, the Battlefield games are always improving.

Oh hey, someone willing to give credit where it's due. That's a rare find on the Escapist, amidst all the RAGE RAGE EA SUCKS comments. Battlefield is indeed fun. And apparently their games are good enough to make people swallow their pride and pay them money anyway, so yea. Shows how much their opinion is worth.

 

[Anti-Robot Man]

That is, assuming BioWare remains under EA after this whole ME3 debacle.

You say that as if they have a choice in the matter... They'll be in the EA developer mass-grave before long, piled on top of Westwood, Bullfrog, Origin*, Maxis and Pandemic.


*it was a developer before they reused the name for their crappy online store/spyware.

 

[Innegativeion]

Individuals? Hardly. The internet has many people who are fun to play with. I enjoy their games.

I have no idea what this sentence is supposed to mean.

You don't believe in individuals?

There aren't individuals on the internet, but there ARE people who are fun to play with?

When did we start talking about games made by people on the internet? Well, I guess some people who work for EA occasionally go ON the internet. Nexon's games are mostly on the internet...

But my point stands; for your own sake you may need to be more accepting that there are going to be people on the internet that you disagree with. Getting angry( or, if you insist against this evaluation, insulting people) isn't really helping.

=========================================================================


At any rate, I'd like to express a sincere hope that, if this buyout were to somehow occur, Nexon's "buy-to-win" freemium model doesn't worm its way into popular games owned by EA. The fanrage fallout could be catastrophic.

I can see it now; each color of N7 armor outside default blue will give improved stats, and will cost a buck 50. Don't worry though. You can fill out one of those virus-inducing "family guy vs. Simpsons" polls for free e-cash. All you need to do is give the 3rd part site your social security number.

 

[Callate]

Ah, I'm thinking, no. Something like the Square-Enix/Eidos takeover only happened because Eidos had been windmilling its arms on the beam for some time; EA, as unenthusiastic as I am towards them these days, still seems from most angles to be raking in the mad bank.

 

[SageRuffin]

That is, assuming BioWare remains under EA after this whole ME3 debacle.

You say that as if they have a choice in the matter... They'll be in the EA developer mass-grave before long, piled on top of Westwood, Bullfrog, Origin*, Maxis and Pandemic.


*it was a developer before they reused the name for their crappy online store/spyware.

So no new possible Jade Empire stuffs? Balls...

 

[Anti-Robot Man]

Individuals? Hardly. The internet has many people who are fun to play with. I enjoy their games.

I have no idea what this sentence is supposed to mean.

You don't believe in individuals?

There aren't individuals on the internet, but there ARE people who are fun to play with?

When did we start talking about games made by people on the internet? Well, I guess some people who work for EA occasionally go ON the internet. Nexon's games are mostly on the internet...

But my point stands; for your own sake you may need to be more accepting that there are going to be people on the internet that you disagree with. Getting angry( or, if you insist against this evaluation, insulting people) isn't really helping.

Maybe he's a solipsist?

 

[Cpu46]

Not likely Koreans. Go back to Starcraft and your crappy MMOs.

Captcha: Of Course - we get crap memes in our captchas now?

This is Nexon we are talking about. Vindictus, Mabinogi, Dungeon Fighter Online, and Dragons Nest are not Crappy MMOs. In my opinion they are some of the highest quality Free to Play MMO's out there.

OT: Nexon owns several great developers, my personal favorite being Devcat. Also they are less tyrannical than EA (or at least appear less so). I see no downside to this, then again seeing their logo pop up every time I boot up most of my favorite games my have something to do with it.

 

[dessertmonkeyjk]

Wait, doesn't Nexon usually do MMOs? If so, I don't know if they really plan on doing their IPs any favors. I do hate EA for the stupid things they do but even I don't think Nexon taking over is a good thing. Something's off.

 

[tehweave]

Not sure if good thing or bad thing...

 

[Crazy Zaul]

Meh, EA can just reach into the abyss, craft a sword from pure hatred and slice the other company to death.

The only thing that could possibly make EA worse is being Korean.

oh, EC just posted on FB and its on Forbes now. Only as a rumor.

But knowing how shady EA are, they probably made a deal with the Koreans to start the rumor just to raise their share price. They have the big report coming up, including how big a failure TOR was.

 

[Darknacht]

Yeah... this isn't happening. EA makes money hand over fist. Why would they cash out to someone who can't buy them outright upfront? "Why yes, I would like to give you a cut of all my future profits for 1/4 my current worth!"

That not how things work, EA is a publicly traded company and doesn't have much say in what investors do with their stock, they can either keep it or sell it off to a third party if they think there's more profit to be made from that. (e.g. Share price at the moment is 16$, if they offer 20-25$ per share buyout they might just take them up on the offer)
The party with a majority share of over 50% (or whoever owns the largest percent of stock) has the most say in how the company conducts itself and works in turn.

This is still highly unlikely, but for wholly other reasons. It would be delicious if it did happen though...

That would be a hostile takeover. But it sounds like Nexon wants the EA board of directors to agree to being bought, which is not going to happen. And, still, they could only buy a quarter, probably less since once they start buying in that kind of volume the price would skyrocket, and that's assuming there are enough EA investors willing to sell.

Er you do know EA has been losing hundreds of millions of dollars for all but 1 quarter of the last 2 years.

Citation. Or, here, I'll do it for you [http://www.google.com/finance?q=NASDAQ:EA&fstype=ii]. Looks like net profits in 2011 Q1 and Q2, and, if you look at their yearly data, you can see they've been steadily trending upward since a dip in 2009. I wish I could see full quarterly data for 2010, I bet they had a good quarter or two then.

Further, even if they are generally "losing" money, that doesn't mean much, as the board/CEO is still being given millions of dollars. Also, they have zero debt, which is pretty amazing. And, they seem to be "losing" money by buying properties, thereby increasing their assets, thereby increasing their revenues (you'll notice 2009 has the largest net loss, but the greatest revenues).

That being said, I'd be worried about a company posting 20% net losses for six years straight, but we can see that they aren't. Not only are they averaging around 10% net loss for the last six years, but they're steadily increasing their net income without decreasing revenues; they're spending less and making steady money, so their investments are paying off.

Generally speaking, a business doesn't want excess profits, anyway. Profits get taxed. A business wants to reinvest its revenue into assets and, after profits have been high, spend their "war chest" on acquiring new assets, which will then show a "loss" for a given quarter. Also, executive bonuses.

Regardless, if Nexon buys EA, they'll almost certainly replace the board of directors, and probably the CEO. And, since the board of directors and CEO are the ones who make the decision to sell (unless Nexon gets hostile), they don't have an incentive to do so as long as they, personally, are making money hand over fist (which they are; EA's CEO has been averaging $15.36 million per year for the last six years, and has been CEO for 15 years) OR Nexon is able to make them an amazing deal (which it can't).

I don't completly understand business finances but if you post net losses for 4 years

(http://files.shareholder.com/downloads/ERTS/1826684202x0x481441/B553C9C1-EBFB-4E7F-A05F-26FD9960A910/Electronic_Arts-2011.pdf)(page 27)

and your assets shrink till nothing your screwed right?

Page 27 of the pdf has the changes to the employee stock purchase plan, and page 27 of the report has a half dozen citations. So I have no idea what you're pointing to.

You're assuming, for some reason, that their assets are shrinking to nothing. EA's assets are growing. It's why they're posting losses: they're acquiring assets. If their assets shrunk to nothing, so would their revenue. But they're revenue's holding steady.

Further, when you're looking to buy/sell a company, it's not just a matter of "are the posting net profits". It's, "What assets do they have? Are those assets making money? Do they have a war chest, and how much? Are they making more assets? Can they make payroll for the next year? Next several years? Are they becoming more profitable than they used to be?" And for EA, the answer to all of those is, "Yes." And, if you're considering selling the company, there's always, "Are they paying me boatloads of money every year that I don't want to lose?" (Yes.) There's also the issue of how much loss (compared to revenues) and where that money's going. If the executives are blatantly funneling money to their Florida beach houses, bad. But if it's going toward acquiring new assets, good.

Eventually, they'll have to start posting some net profits to rebuild their buffer. But, for now, they aren't burning through their cash reserves too quickly and they're becoming steadily more profitable every year.

It's actually kind of interesting, we can watch what happens with THQ. Most of the games they make are licensed franchises (most of which they're dropping), and their stock is in danger of being delisted. Sure, Saints Row is carrying them right now, and Warhammer isn't doing too bad, but they're in trouble [http://www.escapistmagazine.com/news/view/89818-THQ-Has-50-50-Chance-Of-Going-Bankrupt]. So, if someone (like EA, or Nexon) were to make a purchase offer...

But EA is certainly not in the same boat as THQ, and, with their rising profitability, I'm willing to make a slap bet with you that they will not be bought by anyone within the next three years.

I don't think that EA is so unstable that they are likely to collapes, but their financial deffiatly don't look that good, I would not invest in them, and whether or not the CEO want the company to be sold rarely has any impact on what the board decides.
Now looking at their finacial while their income is increasing its still negative, and when combined with a stock price that shows no signs of recovering anytime soon and a complete lack of divedends, you are going to get a lot of unhappy shareholders. Also their assets are not growing in a way that is likely to be bennifical in the longterm, they are increasing their cash stockpile, have a minor increase in physical property, equipment and 'goodwill', however they have a major loss in net intangibles, IP, and that loss is increasing no decreasing. So dispite them bying up companies for their IP the net worth of all their IP is falling. Their total assets are also still more than a billion below what they where 4 years ago and their total liabilities are nearly 650 million more then they where 4 years ago. When you add this to an ever increasing demand for additional paid-in capital, their retained earning drying up as they begin to accumulate deficits, and their increase in outstanding shares, I would hardly say that they are doing will as a company.
I don't think that this is bad enough that they will sell but its bad enough that I would not be shocked if they did.