Seems like a good idea. Apple has about $25 billion in cash and marketable securities and no long term debt, and analysts and investors have been waiting for Apple to put it to good use (what better time than in a down, and possibly bottoming out, economy when everything is cheap?). EA is worth about $7 billion, the lowest since late 2000/early 2001 and has about $2.2 billion in cash and marketable securities and no long term debt. If it is assumed (really big assumption, I imagine some Apple stock as all or part of the offer would excite EA's investors) that Apple makes a 100% acquisition in an all-cash transaction, Apple would walk away with a fantastic asset at a great price, even after considering that Apple will have to pay a premium on the current price. Plus, Apple would essentially get $2.2 billion cash back just for buying EA.
An acquisition would solve the Mac gaming crisis and instantly allow Apple to leverage EA's extensive portfolio and exclusive titles across iPhone, iPod Touch, and Apple TV. Instead of being the middleman (as operator of iTunes store) and taking a cut for each unit sold, ALL the profits would go to Apple. Apple would provide downloads instead of optical media which would save it money on printing and packaging and cut out the middlemen retailers who would normally take a cut. Plus, Apple could claim to be environmentally sensitive AND could (even though it would be bad for consumers) limit the resale, rental, and giving/sharing abilities that come with physical products. Even more, Apple could advertise to parents showing how its iTunes ecosystem is one-stop shopping for legal content, with the brand names, content, and titles that children want, all with universal parental controls for games, TV, movies and music available in one place for all devices.
Also, Apple may never be able to make inroads in Mac gaming without an acquisition, and this would give Apple a golden brand name for gaming in its portfolio and protect itself from Microsoft trying to invade Apple's space in the portable gaming and media center realms. If MS pushes XBOX more towards a media center (than it already is), or releases a portable XBOX, Zune capable of games, or an iPhone competitor capable of playing games, it could really hurt Apple right where it is trying to grow. Just like most products, gaming is heavily brand dependent and if Apple ends up stuck only being able to sell "no-name" games for its platforms, the gaming aspect of the iPhone/iPod Touch will be in trouble. If Apple doesn't act now, it could end up costing a lot more later. One more time, IT'S ABOUT THE BRANDS! Madden, NBA Live, NBA Street, Need for Speed, Command & Conquer, The Sims, etc. Even if Apple just rehashed EA's library for Apple TV, iPhone, and iPod Touch, it could do very well! (
http://en.wikipedia.org/wiki/List_of_Electronic_Arts_games)
Possibly most importantly, Apple would be staving off a potential partnership, acquisition, or exclusivity deal between EA and MS or Nintendo and help it match or exceed those companies regarding the exclusives that those companies already have.
Finally, not that consumers want this, but by buying EA, Apple could slowly provide fewer quality titles to competing platforms and EA exclusives would eventually only be released for Apple products.
Imagine if EA's sports exclusives (
http://en.wikipedia.org/wiki/Ea_sports) were only available on the Mac, iPhone, iPod Touch, and Apple TV... those products would BOOM during holiday sales seasons, especially sales of the likely otherwise doomed Apple TV. It would also make Apple a multimedia powerhouse and provide Apple with a somewhat recurring revenue stream as sports fans buy the latest versions of the popular titles every year.
Buy EA now, the stock will soar on this news.
