Electronic Arts Went Into Debt To Buy PopCap

[CJ1145]

EA and one of the biggest casual game developers in the US. A match made in hell...

 

[thenumberthirteen]

With the way the industry and economy changes a big company like EA is bound to want to keep a lot of liquid assets. I know there are times I have enough cash to pay for something, but I use my card to save me having to go to a cash machine later. Maybe EA's going out on the drink later?

 

[James Joseph Emerald]

Also now captchas have video ads before you can enter them, thats fun.

Sorry to go off-topic, but why do some people seem to have to go through video ads and others don't? That's never happened to me.

 

[TheDooD]

Oh EA you so funny. You better hope and pray you sell a lot of games this winter.

 

[Atheist.]

1,000 USD for 31 shares? The current value of the stock is less than that. 1,000$ will get you 41 shares on the open market right now...

 

[Shadow-Phoenix]

The debt will not be paid off since there is already way too much debt floating around and it wouldn't matter anyway because "Everything goes back in the box".

 

[Art Axiv]

EA's finance department made their homework!

 

[Swifteye]

Owning a company is risky business. Heck starting one you should expect to enter debt or just be right outside debt city so this happening to EA isn't very surprising as it happens fairly often all the time only this time we actually know it's happening as supposed to us finding out after the company goes under. Still though I expect them to make all that money back I mean popcap is really good at what they do.

 

[vxicepickxv]

Well, they've got enough collateral to cover their debt in cash, and they probably have a pretty sweet credit rating, so I think it's a good call on their part.


EDIT:Actually, now that I think about it, it's a very good tactic. Have enough money to cover a loan, get the loan, see if the debt ceiling gets raised. If it doesn't, hyperinflation makes paying the loan off real easy. If it does get raised, pay it off in cash.

 

[puffy786]

Yeah i'm not video game industry expert and no accounted, but wouldn't the interest cost money? I know literally no reason for why EA would possibly want to go into debt when they have the money.

 

[Dalek Caan]

Tis the beginning of the end. Shame really, I feel a pan of pity for EA. Maybe this will act as a wake-up call.

 

[The Rockerfly]

1,000 USD for 31 shares? The current value of the stock is less than that. 1,000$ will get you 41 shares on the open market right now...

Usually when a company is going to be bought many share holders realise the demand has increased so they can sell for a higher price

OT: Hmm interesting, I wonder if the quality of games will be effected in a similar way that bioware game quality went down when EA bought them.

 

[Paragon Fury]

To be fair, this is PopCap we're talking about here. After PvZ2, expect EA to post earnings of well, well over what they spent to get PopCap.

 

[Irridium]

So I take it that buying Playfish and then laying off lots of employees wasn't working out too well for you EA.

Big damn surprise. Hopefully with this move you actually have a vision and plan for it, instead of buying it "just because".

 

[kajinking]

Remember how much they paid for this when they announce that their revenue/profits went down at the end of the year again and everyone is like "oh no EAs videogames aren't profitable."
They do this Acquisition --> Close studio down thing almost every year or at least every 2nd year... of course they're in the red.
http://en.wikipedia.org/wiki/List_of_acquisitions_by_Electronic_Arts

Popcap isn't just a studio though, it was a self-publisher as well, mainly because their mostly-digital-distribution system was extremely effective at selling low-cost casual games like Peggle and Plants versus Zombies. And under the deal, they'll essentially operate in the same way they did earlier (hence the "autonomous" element of the acquisition), except now they can exchange talent and resources from within EA with less hiccups.

For example, imagine someone at Bioware (another EA acquisition) has a great idea for a casual PSN/XBLA/Steam game. Those kind of games simply aren't Bioware's area of expertise, so that game designer pitches it to Pop Cap who could green-light the idea, and then the games designer from Bioware applies with EA, Bioware, and Pop Cap for a temporary placement at Pop Cap. They sign off on it and everyone is happy. The Game Designer get's his game into the development cycle. Bioware's game development teams get a morale boost because they have the flexibility of a diverse parent company so that they can be more creative in their initial concepts and transfer to more applicable studios if it's too far outside Bioware's more RPG-centric style. Pop Cap get's a new game to try out. And EA potentially makes money off the new game. Everybody wins.

This is, of course, all dependent on the top people at each company being rational human beings.

That is a very well worded explination of the situation that most people will be able to understand and proves your argument clearly and without resorting to links or baseless claims. Clearly you my good sir have no place here on the fourms please return when you start shouting "EA SUCKZ THEY"RE GOING TO GO BROKE!!!!!LOLOLOLO". In all seriousness what you said makes a lot of sense and sharing skilled assets in-between parts of a company as large as EA can could really help Popcap out with any projects they're pursuing. Maybe we'll even see their influence in other games like Mass Effect 3 or Dragon Age in the form of in-game minigames. I'd love to see what Popcap could do if they worked on a replacement for planet scanning in Mass Effect 3. Heck I really love it if we saw some Mass effect husks running around PVZ 2

 

[Not G. Ivingname]

PopCap's recent purchase by EA was some pretty big news, partially because the casual developer is going to stay autonomous under the deal...

Why didn't you tell us before? That makes Pop Cap more like the Pixar of the video game world rather than the sell out.

As for the debt thing... I don't get it.