CNBC: Chatter Says Apple Wants to Buy EA? Twitter? Really?

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Apple wants to buy game maker Electronic Arts (EA), according to Guy Adami, who cited unspecified "chatter" in a guest spot on CNBC's Fast Money, as relayed in a recap of Monday evening's show on TheStreet.com.

From the brief mention, speculation and debate have flourished on the Internet, as gaming fans and Apple fans hash out the pros and cons of such a merger. The reasoning is that Apple, flush with cash, is considering acquiring the Windows, Mac OS X, and gaming console game developer with a part of the mountains of cash the company has lying around (more than US$29 billion at last count).

This rumor comes to us at the same time we're told Apple is in the final stages of negotiating a buyout deal of Twitter, and at first blush, neither acquisition seems to make much sense. Why buy Twitter? It would be like buying AOL Instant Messenger -- no one makes any money from it, except for some of the Twitter app developers for iPhone.

Buying EA makes more sense to me, at least if Apple has finally realized that games can sell Macs -- I think they've certainly grokked that games help sell iPhones. By buying such a large, diversified company, Apple could make sure that all of the latest games are available for Mac, and that those Mac versions have the proper resources devoted to that development.

Say, wait a minute, what about that Teversham fellow? You know, the dapperly-named Xbox executive Apple raided from Big Redmond? Dude knows games, in theory, not that Xbox makes any money for Microsoft yet. Apple hired the guy to supposedly fill some educational role in Europe, but when you put him together with this EA rumor, it's easy to see how the two dovetail together.

If Apple is wanting to develop a game console (I'd bet it would be iPhone-OS based), or make either the Mac or iPhone or iPod supertouch a serious gaming platform, the company could use the expertise and talent controlled by EA.

Now toss in a little bit of this chip developer news that's been all the rage, especially the two former ATI guys snagged by Apple, and it's even easier to see that the company could be very, very serious about iPhone/iPod supertouch as a gaming platform.

In fact, I'm guessing that if there's any truth to this EA "chatter" (what a wankerish way to pussyfoot around with a rumor), it's all about the iPhone/iPod supertouch, and any Mac considerations are secondary.

Now, that said, there are some reasons that acquiring EA for the purposes of developing Mac or iPhone/iPod super touch games just doesn't make sense, and the number one such reason is that EA is a large company, and almost all of its talent and revenue are rooted in console gaming and Windows-gaming.

There's not a lot of Mac or iPhone experience over there, though there is a growing iPhone development presence. This has implications for leveraging the talent and skill sets, but it also has revenue implications. Unless Apple were to allow EA to continue to do business in the Windows and console markets, EA would very, very quickly go from a multi-billion dollar company to a multi-tens of million company in a flash.

In the past, Apple has turned its software purchases to Mac-only development efforts (Shake, Logic, Final Cut Pro). There's nothing saying Apple couldn't do differently with EA, but track records are track records.

Accordingly, despite the apparent enthusiasm I exhibited earlier in this column, I wouldn't get too excited about this chatter. It's not beyond the realm of possibility, but it's also not something I'll bank on.

I don't think Wall Street is giving it too much credence, either. EA's stock (ERTS) closed at $21.38 per share, a gain of $0.3427 (+1.63%), on moderately strong volume (11.7 million shares trading hands vs. an average volume of 9 million shares).

For those keeping score at home, ERTS has a market cap of $6.9 billion, chump change for Apple.

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Comments

Josh

If Apple does this I will be flabbergasted.  Not because it’s a bad idea, but because it would mean that “The Street” reported something related to Apple that wasn’t blatent stock market manipulation.

The man has admited, on camera, to using invented rumors to manipulate the price of Apples stock with the intent of making a quick short profit.  He should be brought up on charges by the SEC but it’ll never happen because he’s too damn popular on TV and the SEC is more useless than tits on a bull, or a door knob on a bathtub.

geoduck

EA might make sense. Apple is working very hard to grow into new markets, leaving its computer roots behind. EA games with an iPad type of device could work. I bet that scares the heck out of the XBox group in Redmond.

As far as Twitter; not likely. IMO in two or three years Twitter will be yesterdays toy. A few will keep using it but it will have been replaced for most by the Next Cool Gadget. Most importantly Twitter does not have any really breakthrough technology that Apple could use to make the next Insanely Great thing. It might make sense if there was something in the Twitter system that was truly groundbreaking but AFAIK there isn’t.

Lee Dronick

Forget the games and Twitter.

I would like to see Apple buy Adobe and rewrite Creative Suite in Cocoa. They can keep the current programmers working on the Windows version, but use real OSX programmers for the OSX version so that it looks, and acts, like an OSX version.

geoduck

One of the questions with any EA deal would be if Apple wants to build a games device. It seems that dedicated gaming consoles and systems are where the market has gone. Sure there are some out for the PC, but I think most of the money is in console gaming. Is Apple interested in making such a device. Buying EA so people could play games on their iMac seems to me to be a strategy that wouldn’t go too far.

JonGl

One of the questions with any EA deal would be if Apple wants to build a games device. It seems that dedicated gaming consoles and systems are where the market has gone. Sure there are some out for the PC, but I think most of the money is in console gaming. Is Apple interested in making such a device. Buying EA so people could play games on their iMac seems to me to be a strategy that wouldn?t go too far.

Yeah, but why buy EA, though? If Apple wanted to enter the gaming console business, the better plan would be to do what Microsoft did, and buy Bungie and unleash them on the console. Bungie is a guaranteed winner, IMO. wink If there are talks in that direction, then I would believe them, but EA makes no sense. It’s too big, and too diverse. Apple likes focus, not diversity.

-Jon

OSX86

“but I think most of the money is in console gaming” - recent figures showed the PC gaming market was the only one not to be hit by the current depression.

brian

About buying bungie…. doesn’t work, when microsoft released them they made an agreement with them which states that they continue making games for xbox and remain independent. also if ea gets bought out by apple I will mourn them. apple might know how to make idevices but they don’t know anything about gaming, for god sakes gaming on an apple is a joke. as for a game device from apple I don’t think so, why would ea have any knowledge about that kind of thing? they make games not gaming platforms.

Bill Johnson

Never ever, ever ever, ever going to happen.  Just typical idiotic garbage.

JonGl

About buying bungie?. doesn?t work, when microsoft released them they made an agreement with them which states that they continue making games for xbox and remain independent. also if ea gets bought out by apple I will mourn them. apple might know how to make idevices but they don?t know anything about gaming, for god sakes gaming on an apple is a joke. as for a game device from apple I don?t think so, why would ea have any knowledge about that kind of thing? they make games not gaming platforms.

Well, actually, I wasn’t very serious, but I thought that the only stipulations were that they would not have the rights to Halo. Anything and everything else is game. (or is there a “no other console” clause in there…. In any case, as others have said, it is not going to happen, and I would give 2 cents for it if anything like an EA or other game company acquisition did happen.

-Jon

GameWatcher

EA, huh! Rather than a biggie like EA that has already diversified abundantly, Apple should look at small/mid size companies like Digital Chocolate, Living Mobile etc. Such companies have a strong focus on mobile games with a pie of iPhone titles amongst their offerings. Such agile and relatively smaller companies are better suited for Apple to cast them to bring out original mobile games that they are already well known for in the market.

Steven Fisher

I don’t think an offer on EA would be a bright move. Microsoft can’t let EA be purchased by Apple, and could beat any offer.

Twitter might actually make sense. There’s some talent there that Apple probably wouldn’t mind adding to the MobileMe team.

But I’d still bet against both.

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