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August 18, 2012 11:09 AM   Subscribe

Electronic Arts allegedly in talks to sell to private equity; would "do a deal for $20 a share". [NYP] [Int. Business Times]. The markets appear to think there's at least some substance to the rumour, as EA shares jumped more than 7% to $14 in early trades on Thursday morning and have remained at around $13.75. [Google Finance chart]
posted by jaduncan (40 comments total) 4 users marked this as a favorite

 
So what would be the financial implications to EA stock holders if this goes down?
posted by griphus at 11:19 AM on August 18, 2012


Also, if you take a look at EA's stock price for the last year or so, it's basically a 45-degree angle until late August.
posted by griphus at 11:20 AM on August 18, 2012


Is this the part where I get to hope they're going to sell off the games I enjoy playing so that someone else can manage them? It's not is it? Damn.
posted by Shutter at 11:24 AM on August 18, 2012 [2 favorites]


That's a hell of a premium for EA.

I'm really curious if EA is the one who bought OnLive in the bizarre not-bankruptcy event yesterday. That's a terribly valuable gaming property, it's a shame they didn't make it alone.
posted by Nelson at 11:29 AM on August 18, 2012 [1 favorite]


Going private is a /very/ smart thing to do if you think your shareholders are not going to profit as they have in the past, and are looking for a way to exchange shares for a fast buck. It beats a run on your stock.
posted by clvrmnky at 11:29 AM on August 18, 2012 [1 favorite]


So what would be the financial implications to EA stock holders if this goes down?

If someone bought the company for $20/share, then you'd get a check (or equivalent) equal to $20 for every share you own. That means if you bought under 20, yay! If you bought while it was over 20, you'll lose money, but it's better than if someone bought it at $15.
posted by (Arsenio) Hall and (Warren) Oates at 11:33 AM on August 18, 2012


Ah, so, this theoretical stock owner we're talking about would cease to own stock and just get a bunch of cash?
posted by griphus at 11:38 AM on August 18, 2012


Yes. Typically would just show up in your brokerage account. It's like you're being forced to sell your stock.
posted by (Arsenio) Hall and (Warren) Oates at 11:39 AM on August 18, 2012


From the NYP link:

"EA, whose market cap is around $4 billion after a 37 percent drop this year, has been buying back shares."

That's... a lot.
posted by merelyglib at 11:40 AM on August 18, 2012


So OnLive was sold?
posted by Ad hominem at 11:44 AM on August 18, 2012


sold itself to an unnamed buyer late Frida

Oh, so it was a firesale. Buyers get what? offices, a bunch or chairs and patents.
posted by Ad hominem at 11:47 AM on August 18, 2012


That means if you bought under 20, yay! If you bought while it was over 20, you'll lose money, but it's better than if someone bought it at $15.

You'd probably be very happy to sell at $20, since absolutely nobody else is going to be offering that for your share. EA saying they'd deal at $20 means they probably would at $17-18. Origin is notably failing to be the next Steam, and EA's at $13 and going downwards. There's not really much upside to negotiate with.
posted by jaduncan at 11:56 AM on August 18, 2012 [1 favorite]


It would be nice if this is the crack that brings the edifice tumbling down. At the very least I'm hoping a turn inwards stops them from buying other studios and ruining them for a few years.
posted by lumpenprole at 12:03 PM on August 18, 2012 [3 favorites]


EA and BestBuy have a lot in common right now, both trying to raise enough from investors to go private. The reality though is both companies have been mismanaged from an investment strategy.

EA wants to do this sale at $20, just like BestBuy wants to do theirs at $24/$26 per share. Sadly this is the CEO hype and is not based in reality. The companies are looking to raise that in the same way PT Barnum looked for folks to see his show.

They announce this, some suckers jump on, and those who are watching the short interest giggle with excitement. For the individualthe investor, the concept of salvation through private equity is a little trying to win an egg race against overly competitive seven year olds while you are tripping on peyote with an absinthe chaser. The big wigs will make their money, but the investors who jump on now assuming they'll make $6 on the subsequent sale are just minimizing the CEO's loss if value for his shares. He'll make money at $13.75 or at $12 a share, but nowhere near as much as if GQ public is willing to subsidize and legitimize the over-valuation.

Just watch, over the next few weeks, you'll see a bump in the price, then we'll get some financial bait and switch, prices will stop skyrocketiting, their rating will be down-graded and the short interest will be shown to be where folks make their money - betting against the success of privatization.
posted by Nanukthedog at 12:37 PM on August 18, 2012 [2 favorites]


so is going private the new going public???

not that i'd ever want to invest in EA. best case, i lose my cash after their latest harebrained DLC-scheme backfires. worst case, i make some filthy, filthy profits and never feel clean again.

so who's up for some madden football 2027?
posted by RTQP at 1:36 PM on August 18, 2012


All I know is that sometimes in the offseason I want to play Madden and then I hear EA SPOOOORTS IT'S IN THE GAAAAAAAAME and I feel like a douchecanoe for even bothering.
posted by BitterOldPunk at 1:36 PM on August 18, 2012


BitterOldPunk, you are not the douchecanoe for even bothering. EA is the douchecanoe for stealing football games from humanity
posted by RTQP at 2:59 PM on August 18, 2012 [1 favorite]


so who's up for some madden football 2027?

Who's up for some dental surgery?
posted by JHarris at 3:44 PM on August 18, 2012


(That sounded threatening, eesh. I meant in terms of "Who wants to experience a painful thing," not something that I wanted to inflict upon RTQP.)
posted by JHarris at 3:45 PM on August 18, 2012


I never got all the hate against EA
posted by the theory of revolution at 4:13 PM on August 18, 2012


I never got all the hate against EA


Their management was for a long time infested with the worst sort of business major fratboys who had no respect whatsoever for the developers who did the work.
posted by ocschwar at 4:50 PM on August 18, 2012 [6 favorites]


I still don't get why that's an issue. Isn't the same true for IBM, or DuPont, or General Motors or any other big corporation? If people don't like their jobs, shouldn't they quit? Why do people in games spend so much time trying to co-opt other people's pain?

The thing I don't get is that people on this very thread have said EA has "stolen football games from humanity". I understand EA has a monopoly on professional football, but I also wasn't aware that football games were something that this universe owed humanity. I dunno, it seems like an awful silly reason to hate something so much you want to see it destroyed.
posted by the theory of revolution at 5:11 PM on August 18, 2012 [1 favorite]


Yes it is true, and no one much likes those other companies either. But Electronic Arts makes entertainment software, we don't like to think that the people who make games are subject to terrible working conditions.

Plus, because a lot of kids out of school naturally want to make games, there is a huge glut of labor in that market, which companies like EA ruthlessly exploit, depressing wages and encouraging high turnover, turning a bunch of bright-eyed programmers into bitter wrecks. You can say they should just quit, but you would be greviously, woefully ignorant of the economic realities of employment in the United States, where people have bills to pay, future employers might not look kindly of someone who outright quit their last job, and there is huge competition for a small number of positions as there is in game development.

Additionally, EA barely has an original bone in their body anymore, but they used to be one of the most enlightened game companies around at about the time of their founding, they published countless 8-bit computer classics. They still own the rights to many of those classic properties but they're content to just SIT on them and let them rot.

And there's more. They bought the exclusive rights to the NFL and NBA licenses, meaning if you want to play with real players and teams you have to get their franchises, giving them a huge marketing edge that has destroyed the market for other studios' versions of those sports, which has meant that EA's own programmers have been able to give us surprisingly few substantive new features other than roster changes in recent versions.

For these reasons, and more besides, it would be better for all of us if Electronic Arts just died. You could take the same tack you have been, that is to say, MARKET MARKET MARKET. Well, phooey to that. Markets prioritize based on financial benefit alone, but there are virtues that don't easily map to a financial axis, or are difficult to bring economic force to bear to fix, and those get short shrift when a huge corporation that sees the world in terms of dollar signs alone begins sinking its claws into a system.
posted by JHarris at 7:52 PM on August 18, 2012 [5 favorites]


As for something that the universe owes humanity, you mischaracterize the situation. It's something that humanity has created, and yet to which other humans are preventing access. It is right to hate those humans. Call them names and shake your fist. Cast aspersions and bestow curses. Let the hate flow through you! The Dark Side is underrated these days.
posted by JHarris at 7:54 PM on August 18, 2012


Having just left the beast (I was on the Maxis team): 1. it's not just programmers who get raked. 2. There are a lot of good people there and some godawful management. and 3. It looks good on the resume, and I am so happy to be outta there. Really really.
posted by emmet at 8:32 PM on August 18, 2012 [3 favorites]


With this announcement, and the way they pissed away the Star Wars franchise with Star Wars: The Old Republic, I expect they'll announce changing their logo to a guy tripping over his own dick Monday morning.
posted by ob1quixote at 9:00 PM on August 18, 2012 [2 favorites]


Well, so much for Spore 2.
posted by surazal at 9:59 PM on August 18, 2012


IMHO, football video games peaked with the four player version of Atari Football.

Why, yes, I am old.
posted by InsertNiftyNameHere at 12:07 AM on August 19, 2012 [1 favorite]


They bought the exclusive rights to the NFL and NBA licenses</em

What about the NBA2K series?

posted by juiceCake at 10:11 AM on August 19, 2012


As far as I know, the only major exclusivity deal EA currently has in place is the NFL deal.
posted by Justinian at 11:13 AM on August 19, 2012


If Bain destroys EA, who do I root for?
posted by mek at 2:48 PM on August 19, 2012


Ah, I will bow to Justinian's knowledge here, as I purposely stay away from most sports games. I take a Hodgmanian stance on sports.
posted by JHarris at 7:24 PM on August 19, 2012


If anyone is still paying attention, the stock seems to be going over the falls in a barrel.
posted by griphus at 8:10 AM on August 20, 2012


griphus: If anyone is still paying attention, the stock seems to be going over the falls in a barrel.
Yeah? I'm no professional, but I see that after a long slide EA has been going up since their Jul 31st earnings call.
posted by ob1quixote at 11:08 AM on August 20, 2012


Then it'll cost the private equity firm less money to buy them out. That's good if the guys are good, bad if the guys are bad. If it's Bain Capital or equivalent, well, I don't see it as good for Electronic Arts, but maybe someone here knows more about the implications than I do.
posted by JHarris at 11:09 AM on August 20, 2012


Oh, they're still doing better than before, but there was a pretty sharp drop this morning and it looks to be evening out at just a little better than where it left off. I think I may have been too hyperbolic in my phrasing.
posted by griphus at 11:26 AM on August 20, 2012 [1 favorite]


(I am a dabbler, which may actually be worse than just not being a professional.)
posted by griphus at 11:27 AM on August 20, 2012 [1 favorite]


Let's not lose sight of what's really important here, which is that, someday, somehow, Mass Effect 3 might get a decent ending.
posted by Halloween Jack at 11:28 AM on August 20, 2012 [1 favorite]


It took nine years for a mod to make KOTOR 2 the game it should've been. So, hey, 2021 is only a dream away.
posted by griphus at 11:29 AM on August 20, 2012 [1 favorite]


All I know is that sometimes in the offseason I want to play Madden and then I hear EA SPOOOORTS IT'S IN THE GAAAAAAAAME and I feel like a douchecanoe for even bothering.

Apparently You Can Murder People In The New Madden
posted by zombieflanders at 5:48 PM on August 23, 2012 [1 favorite]


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