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Riccitiello: EA avoiding big acquisitions as "we're still out of favour"

Tue 30 Nov 2010 11:04am GMT / 6:04am EST / 3:04am PST
BusinessPublishing

Claims buying Harmonix would be like "catching falling knives"

EA boss John Riccitiello has claimed the publisher is not currently seeking further large acquisitions, admitting that investors' faith has been shaken by its tumbling share price.

The CEO claimed to be focusing the company on boosting digital revenues - from online, mobile and Facebook - to $750 million. "I need to finish engineering and building to make that happen," he told Bloomberg. "I don't need a billion-dollar acquisition."

However, he was considering smaller deals. " There are probably 25 companies on our radar that would make sense for us at somewhere between 5 and 10 percent of the asking price."

EA has seen its stock collapse by 74 per cent since 2007, and over the course of this year the value dropped by 15 per cent. High profile and expensive purchases such as Playfish and Chillingo have likely contributed to this, as apparently did the critical and commercial performance of Call of Duty rival Medal of Honor.

When quizzed as to whether the publisher was interested in buying Harmonix following Viacom's decision to rid itself of the Rock Band studio, Ricitiello admitted that "We're still out of favour. Moves that look like I'm doubling down on yesterday would make it harder still to convince investors that tomorrow is the Promised Land."

As well as a potential negative shareholder response, Riccitiello hinted that Harmonix could be something of a poisoned chalice. "I'm sure some smart investor will buy the business feeling that they can catch a falling knife, but more people have been cut trying to catch falling knives than have benefitted from getting the timing exactly right."

Riccitiello remained positive that EA, at least, would have another day in the sun, thanks to its digital investments. "There is going to be a time when perception catches up with the facts."

3 Comments

Jamie Watson Studying Bachelor of Games & Interactive Entertainment, Queensland University of Technology

179 0 0.0
just buy it already!!

the last thing i want to see is Activision buy it!!!

Posted:3 years ago

#1

Greg Wilcox Creator, Destroy All Fanboys!

2,193 1,170 0.5
Out of favor with who (or is it whom)?

Feh. Screw "investors" - If they're not playing the games, they have no business bitching about what some analyst barks at them about what to do with their money. If they want a smart investment, go stick everything into the damn defense industry or anything else that relies on insane amounts of profit pushed back and forth and leave the games industry out of their portfolios.

This crap reminds me of the speculators that nearly killed comics in the 90's and absolutely killed collectible sports cards, period. everyone wants a quick buck and a long term fix, the industry responds by cranking out too much junk, the market gets FILLED with unsold product, much of which is in need of more work and next thing you know, the bottom falls out after a few more stupid moves on the chess board.

This industry is going to go right into the toilet (again) if it keeps letting business roll over creative with profit as the sole regard. Of course, there's a lot to be said about overly jaded games journalists and how they don't exactly help matters any, imperfect products on consoles that need patching (I'll bitch about this 'til I drop dead) and a few other things that annoy folks like me (and could turn this into 1982-1984 all over again)...

Posted:3 years ago

#2
EA are in a similar situation to Microsoft.

The stock price is more a reflection on the fact that they won't be able to "grow" at the rate of a Zynga, which is valued at more than EA.

However if you ask me what I would prefer:

The franchises/assets of EA or Zynga, I know what I would prefer.

Posted:3 years ago

#3

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