Rumor: EA Facing Takeover Bid from Korean Giant

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BrownGaijin

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Jan 31, 2009
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DVS BSTrD said:
FINALLY! EA could actually be run by somebody with a Seoul


OT: The initial image that popped into my head was a bunch of Koreans landing on the Death Star and walking up to Emperor Palpatine with suitcases of money in their hand. The image goes blurry after that.
 

Azuaron

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Mar 17, 2010
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Kumagawa Misogi said:
Azuaron said:
Dexter111 said:
Azuaron said:
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.

Kumagawa Misogi said:
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.
 

gigastar

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Sep 13, 2010
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JaceArveduin said:
Nexon acquire EA? Oh no, please no, there's still a tiny sliver of hope that BFME3 will happen, but if Nexon ends up in control, I'm not sure I want to see the resulting BFME3...
EA no longer holds the liscence to make Lord of the Rings related games, therefore your tiny hope was suffocated under a pile of sand about... a year and a half ago.
 

JaceArveduin

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gigastar said:
JaceArveduin said:
Nexon acquire EA? Oh no, please no, there's still a tiny sliver of hope that BFME3 will happen, but if Nexon ends up in control, I'm not sure I want to see the resulting BFME3...
EA no longer holds the liscence to make Lord of the Rings related games, therefore your tiny hope was suffocated under a pile of sand about... a year and a half ago.
But it can be buy it again. I knew they didn't, it's the reason the official servers went down ages ago. Unfortunately (unless I'm mistaken) They do hold the rights to the BFME franchise. They can't make/sale LotR related things without buying the rights, but no one else can make BFME things without getting the rights from EA. At least I'm fairly sure that's how it works. And with The Hobbit coming out, EA just might decide to try it again, just might.
 

Croaker42

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Feb 5, 2009
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Pipotchi said:
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.
 

KoudelkaMorgan

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If 2 companies I despise want to combine into the lower half of captain planet and shit all over themselves they can have at it.
 

somonels

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Oct 12, 2010
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Hahahaha, that would ******* deserving.

'While you and I would probably love to "only" have $1.5 billion in cash'
Wouldn't this be more logical: 'While you and I would probably love to have only $1.5 billion in cash?'
We get it, no need to stick fingerquoutes in writing. HTML even has an tag that would be applicable.
 

Don Savik

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Aug 27, 2011
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I would rather have Battlefield and Mass Defect than another Maple Story.

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

dyre

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Mar 30, 2011
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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!"
 

AbstractStream

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Feb 18, 2011
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The thought of this scares me...
Croaker42 said:
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

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Feb 20, 2011
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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

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Dec 19, 2009
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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.
 

Aeonknight

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Don Savik said:
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

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SageRuffin said:
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.