Updated from Wednesday, Sept. 23

REDWOOD CITY, Calif. (

TheStreet

) -- A

Microsoft

(MSFT) - Get Report

spokesman said late Wednesday the company has "no plans to acquire" video game maker

Electronic Arts

(ERTS)

, according to a report from

MarketWatch

.

A

Reuters

report, citing information from traders, circulated Wednesday saying the software giant was interested in buying EA, the publisher of the

Madden

,

Medal of Honor

and

FIFA

video game series.

Shares of Electronic Arts rose $1.31, or 7.1%, to close at $19.83 on Wednesday. The stock fell 32 cents to $19.51 in after-hours trading.

Although it was merely a rumor, an acquisition would boost Microsoft's presence in the video game space. The sector, however, has struggled to live up to its recession-proof billing, although this could mean an attractive valuation for M&A targets.

U.S. video game sales

fell

in August for the sixth straight month, according to figures from NPD Group, and analysts highlighted

disappointing

sales for the latest game in the Madden series.

EA, which was recently

downgraded

by Goldman, nonetheless has a potent weapon in its armory. The Redwood City, Calif.-based firm, which competes with

Activision Blizzard

(ATVI) - Get Report

and

Take Two Interactive

(TTWO) - Get Report

, recently launched

The Beatles: Rock Band

game, which is expected to be a top seller this holiday season.

Shares of Microsoft fell 6 cents in the regular session to end Wednesday at $25.71. The stocks gained 2 cents after hours.

--

Written by James Rogers in New York

.