REDMOND, Wash. (
) -- So,
says that it has
to buy video game maker
, ending months of speculation that the two firms were preparing to ride off into the sunset together.
The news, however, is hardly a bolt out of the blue. Industry observers had already warned that the deal would be more trouble than it is worth, particularly given EA's close relationship with Microsoft rivals
"It makes no sense for one of the big hardware manufacturers to acquire one of the big software manufacturers," Todd Greenwald, senior analyst at Signal Hill Capital Group, told
late Wednesday. "There's no way that Microsoft is going to develop games for the PS3 or the Nintendo Wii."
With more than 50% of EA's revenue coming from Sony and Nintendo, an acquisition would have caused turmoil in the gaming sector, he added, explaining that it could also have raised antitrust concerns.
report, citing information from traders, circulated Wednesday saying the software giant was interested in buying EA, the publisher of the
Medal of Honor
video game series.
The rumor forced EA shares up Wednesday, although they retreated in pre-market trading Thursday, falling 43 cents, or 2.17%, to $19.40.
Microsoft shares rose 18 cents, or 0.70%, to $25.89 in pre-market trading.EA is not the only video game maker that has been attracting
chatter this week. Acquisition speculation has also swirled around
, publisher of the
UFC 2009 Undisputed
mentioned in the press as possible purchasers.
Greenwald, however, says that actual deals, such as
, tend to be much more stealthy.
"If you look at the biggest deals of the last few weeks, there has been no rumor of them," he said.
U.S. video game sales
in August for the sixth straight month, according to figures from NPD Group, and analysts highlighted
sales for the latest game in the Madden series.
EA, which was recently
by Goldman, nonetheless has a potent weapon in its armory. The Redwood City, Calif.-based firm, which competes with
Take Two Interactive
, recently launched
game, which is expected to be a top seller this holiday season.
-- Written by James Rogers in New York