EA: Harmonix buyout is ?catching a falling knife?
Tuesday, 30th November 2010 at 10:24 am
CEO John Riccitiello publicly snubs chance to buy Viacom studio
The boss of Electronic Arts has popped inflated rumours that the firm wants to buy for-sale developer Harmonix.
John Riccitiello said buying Viacom’s Rock Band developer would be like “catching a falling knife”.
“There is going to be a time when perception catches up with the facts,” he said in an interview with Bloomberg.
“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 benefited from getting the timing exactly right.”
Earlier in November, Harmonix owner Viacom put the “unprofitable” studio up for sale. The developer’s breakthrough title, Rock Band, is distributed by EA.
But, though buying Harmonix made some “theoretical” sense, Riccitiello said it needs to pick its battles with great caution.
“We’re still out of favour,” he said. “Moves that look like I’m doubling down on yesterday would make it harder still to convince investors that tomorrow is the promised land.”
EA has reported a chain of consecutive quarterly losses for over two years.
Elsewhere in the interview, Riccitiello appeared to suggest that prices of various game studios have become over-inflated.
“There are probably 25 companies on our radar that would make sense for us [to buy] at somewhere between 5 and 10 percent of the asking price,” he said.
Riccitiello would rather buy firms that add technology, capability and intellectual property, he said.
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