Published on February 20th, 2007 | by Deejay Knight, Editor/Founder
Take-Two stock downgraded to "sell" by analyst
What do you do when your fiercest rival in the sports game market consistently pumps out better rated games by gaming journalists and gamers, but doesn’t put up the numbers to compete?
You’d buy them out, of course! Or at least that’s what Wedbush Morgan Securities analyst Michael Pachter believes of EA Sports and it’s rival 2K Sports. He believes the juggernaut EA will buy out 2K Sports, and has decided that Take-Two Interactive’s stock is a “sell.
Pachter also evaluated the chances of the company being acquired, broken up and sold in pieces, or being taken over by activist investors. While he described all three scenarios as “unlikely,” he did suggest that the publishers currently unprofitable 2K Sports operation might be an acquisition target for its fiercest rival, Electronic Arts. According to Pachter, EA is the most likely buyer for 2K Sports because few others would be willing to go head-to-head with the Madden NFL publisher in the sports genre.
“It is clear to us that Take-Twoâ€™s sports business would have tremendous value to EA, as it would give EA a monopoly on football, basketball, baseball, and hockey,” Pachter said. “It is arguable that EA would benefit by as much as $1 billion if it were to obtain an exclusive; this does not mean that it is willing to pay $1 billion.”
Personally, I don’t think that EA is too worried about the series. Both series’ sports titles are worthy purchases, and the marjority of reviews that i’ve personally seen only score the 2K Sports games marginally higher.
Still, even with higher scores, 2K doesn’t have anything that challenges EA’s bread and butter: NFL titles. The recently announced All-Pro Football 2K8 doesn’t have the official NFL license — that’s owned by EA.
So I’d guess that EA isn’t too worried about 2K Sports. Of course All-Pro Football will sell, but without Madden and the NFL license, a lot of football gamers might just look past that one.
I’ll still get it though…
Analyst downgrades Take-Two stock [via GameSpot]