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Electronic Arts Inc. (ERTS) Message Board

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  • monkabc3 monkabc3 Sep 1, 2011 1:19 PM Flag

    DIS for ERTS

    IMO, EA is too expensive to buy. I think someone would have to pony up $55+ a share to even get the ball rolling and nobody wants or has the war chest to do it. At this point EA isn't MAKING enough net income for someone to want to buy them. MS not an option because of conflict and DIS can't/won't afford them. Who else is out there? EA has to make its way back to big profitability on its own then it would be a potential for acquisition, then it would be too expensive for acquisition. I think the topic is not realistic.

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    • you have a point and I don't fully disagree. but you have to recognize that ERTS is a strategic asset in this digital/mobile world. it's a perfect utility for Disney to sweat their intellectual property across many more platforms. Playdom is not robust enough for them and they don't have knowledge publishing large AAA titles or doing MMOs. I think another thing is interest rates are very very low so you could finance an ERTS acquisition at 5-6% for a company like Disney or 2-3% for a company like Microsoft. The investment pays for itself in 8-10 years and the gaming market is expanding, margins are rising with digital add-ons, mobile etc. You can't look at Net Income and EPS you have to look at year-end Free Cash Flow trend and Ebitda guidance 2012, 2013, 2014. That's where strategic buyers will be looking to when assessing value of this franchise, their IP content, and distribution capabilities/knowhow. Hell I would love if somebody paid $55. But reality is DIS has wanted this in the past - that's 100% confirmed. Question is would a strategic wait till $40+ to make a bid or make a bet now while it's at $22/share.... I say an 80-100% premium to $22 makes a lot more sense than a 50-60% premium to $40/share.

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