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EA acquisition by Microsoft rumours "seem silly" - analyst

No way Microsoft could make the maths work, says Cowen

Cowen analyst Doug Creutz has slammed the possibility of Microsoft buying EA as rumours of such a merger continue to circulate.

Meanwhile, Microsoft has issued a flat denial of any such intention with a spokesperson telling MarketWatch, "We have no plans to acquire EA."

"We think the likelihood of any such deal is inconsequentially low," said Creutz, pointing to the fact that EA currently derives over 30 per cent of its revenue from the PlayStation 2 and PlayStation 3 platforms as evidence.

"[This] would almost certainly disappear in the event of a Microsoft acquisition, since presumably the point of the acquisition would be to secure EA's products as Xbox 360 platform exclusives."

A further 10 per cent of EA's revenue also comes from the PlayStation Portable and Nintendo DS; revenue which would additionally be at risk in the event of Microsoft buying the company, he added.

"In our view there is simply no way that Microsoft could make the math work due to the massive hit in EA's revenue and earning post-acquisition.

"This is even assuming such a deal would pass regulatory muster, which we find highly doubtful," Creutz concluded, in an research note entitled EA Acquisition Rumours Seem Silly.

EA's share price had risen 7.07 per cent at close of trading yesterday in response to the rumour, before falling back 1.61 per cent after hours.

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