The No Update Update: EA and Take Two

Dating back to February, Electronic Arts and Take Two were pitted against each other in a very public corporate takeover battle.  For months, the companies issued dueling press releases and went back and forth in SEC filings.  On August 18 that process ended.  Electronic Arts announced they were allowing their Tender Offer to expire.  In reply, Take Two invited the formerly hostile suitor to review documents on a possible path toward a friendly merger. 

Today, the companies filed one last document.  An 8K announcing they’d entered into a new material agreement – one assuring confidentiality in all their future discussions.

The update from the comanies s there will be no more updates. From here on in, and for the near term foreseeable future, the rollercoaster ride of back and forth press releases is officially closed. Silence will be golden.  Click to Read More

EA vs Take Two: Now They’re Talking

takeover talkThe gloves came off today in Electronic Arts protracted hostile takeover effort to acquire Take Two but in a surprise twist, it wasn’t an escalation but rather a move toward a possible handshake and reconciliation.

EA announced they will allow their Tender Offer to expire tonight at midnight as planned.  Take Two, in turn, will include EA in their discussions about “Strategic Alternatives.”    As part of that dialogue, Take Two will provide EA with a formal presentation that includes non public product pipeline and financial projections.

The two companies talking amicably opens the door to the prospect of a possible friendly acquisition.

Timing is everything.

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Legal Brief: Open Source Licenses Win Important Appeal

copyright puzzleThe merits of unconditional giving aside, if you build something and decide to give it away, decide to put it into the public domain, can you attach strings to the gift? Can you set rules that stick with your invention and continually govern how it will be used from owner to owner to owner?   And  if those rules aren’t’ followed is the violation copyright infringement?   In a ruling deciding a case addressing the enforceability of open-source software licenses, Wednesday the US Court of Appeals for the Federal Circuit said yes.  The decision reversed a San Francisco Federal Court ruling.

To many, the news may seem like an insignificant, or esoteric, legal discussion.  The Open-Source community, which was rallying for the result, would argue otherwise. Click to Read More

Modeling Apple iTunes and App Store EPS Potential

app store mathYesterday’s “Applevine” post on Metue summarized some of the current Apple reports and rumors circling the news world.  One of the elements included was a recap, and light review, of newly reported data on how the new iPhone supporting “App Store” is doing.   The numbers were impressive and there is clearly great potential but the take here was cautionary; a bias toward pragmatism with predictions.  One month seems too slight a sample to use for accurately forecasting revenue growth or impact on EPS.  A few raised flags of dissent. 

One comment speculatively said the store could be a 80 to 85 percent gross margin business.  Another said that the store could add as much as ten or twenty cents to quarterly earnings per share.  Those numbers weren’t supported.  They were just “pie in the sky claims,” but still they are out there and they beg a question: what’s the App Store potentially worth – not qualitatively, not from a behavioral analysis, not from a zealous Apple fan, nor from a detractor – simply by the numbers.  If we set aside the opinion that one month of data is too little to be meaningful and use it anyway, if we break out the Graham & Dodd, fire up the spreadsheets, how much of a contribution could the App Store make to Apple’s bottom line if the current levels are annualized?  It’s got a great revenue story but how much for earnings?

How much might the App Store contribute to earnings per share if the store’s revenue grows to $500m, or passes $1 Billion? 

What might it mean to Apple shareholders on a standalone basis that disregards the store’s greater contribution as a driver of iPhone (and iPod Touch) sales?

There’s no easy answers, but in this post we’re going to try and set out a framework for looking at it – a way of adding numbers to wild speculation. 

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Media Earnings Recap: News Corp, Marvel and Time Warner

earnings wrapWith most of the big names in the media/tech space reported, it’s been an up and down earnings season.   There have been some hits and some misses.  There’s been some positive guidance and some suspect.  Now three of the remaining big names have reported their performances.  Summing them up, here’s the tally from News Corp., Marvel Entertainment and Time Warner:

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Courts Approve Remote Storage DVRs

copyright crosshairsCopyright law is a funny beast.  Even in its most recent incarnations, freshly stamped with Congressional approval, it rarely keeps pace with changing business models and new invention.  It’s evolutionary law subject to seemingly constant interpretation (and re-interpretation) to match legislative intent to new market paradigms.  A case in point: in March 2007, the U.S. District Court in New York ruled a digital video recorder (DVR) that used remote storage instead of a local hard drive violated copyright laws.  Yesterday, the U.S. Court of Appeals (2nd Circuit) reversed the ruling and said Cablevision’s planned remote storage DVR (RS-DVR) is legal.

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Venture Round Up: 4 Recently Funded

fundedThere are indexes tracking just about any business metric you can think of.  For 4.5 a half years, University of San Francisco professor Mark Cannice has been tracking venture capitalist confidence.  In early July he reported the second quarter result for his index was down to 3.07 on a 5 point scale.  It was the third consecutive new low in the Index’ history.   Still, despite VC’s concerns about the economy and the state of their investments,  there’s no shortage of companies getting funded.  In the media world,  Heat Wave, Clickable, Crowd Fusion and NGMoco have all recently closed new rounds.  Here are the details in  the Metue Venture Wrap Up:

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