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Analysts: EA Acquisitions 'Prudent', BioWare Making Star Wars MMO?
by Brandon Boyer
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October 12, 2007
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Responding to EA's acquisition of BioWare/Pandemic, analysts from Citi, Oppenheimer, Lazard, and Wedbush Morgan have all reacted positively, saying the move was well worth the $860 million price, and speculating Bioware's "mystery MMO" will be Star Wars themed, calling it a "strong positive" for EA.
Citi's Brent Thill noted that the "industry is buzzing over [BioWare's] mystery MMO," predicting, "based on past development work" that Bioware is quietly working on the Star Wars MMO. As said, Thill calls the potential of the title a "strong positive" for the publisher, and one that "bolsters [its] MMO exposure."
All of the analysts agreed with senior EA officials that the move makes great strides to increase its output in the RPG and action/adventure categories, and, said Oppenheimer's Shawn Milne, "is a prudent use of capital and underscores the more aggressive nature of new CEO John Riccitiello."
Lazard's Colin Sebastian said that while the price for the two studios was "significant," "top talent comes at a top price" and reminded investors that "the acquisition provides EA with 800 additional game developers," and "provides increasing visibility to peak earnings expectations for EA in the new cycle."
Wedbush Morgan's Michael Pachter adds that "Pandemic and Bioware staffs are a good cultural fit for EA, with a solid work ethic (19 games released since 2000), high quality games (an average game ranking of around 80), and sound financial results (several games with over 1 million in unit sales)."
"Over the long run, we think that EA’s acquisition of Pandemic and Bioware will pay dividends," said Pachter, "and we think that the teams and properties acquired will solidify EA’s dominant market position."
"We note that post acquisition," he concludes, "EA will have less than $1 billion in cash (excluding its marketable securities investment in Ubisoft), suggesting to us that rumors about a potential public company acquisition are unfounded. We believe that EA has made a large bet with its acquisition of Pandemic and Bioware, and expect its future focus for acquisitions to be in Asia."
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Hmmmm... work ethic measured in the number of games released over a given period is highly debetable. Work ethics, are hopefully a bit broader than that, i.e. keeping an eye on what are the inputs that have gone into the production of a given output. I.e. if a company has delivered 19 games over 7 years but has caused a significant proportion of its people to burn out, that wouldn't be good work ethic. So, not quite the best choice of words there. That been said, I have no reason to believe that neither Pandemic nor Bioware have bad work ethics in any sense. My comment and criticism is only about the wording and how it severely diminish an important field like ethics and specifically work ethics.