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Dear Take-Two and Electronic Arts: I’m not an arbitrator. And neither are my colleagues who cover video games.

I know it’s nothing new in the fast-paced world of hostile takeovers, tender offers and other forms of mergers and acquisitions, but it’s beyond obvious that both Take-Two and EA are using the press–and our outreach to the public–to try to negotiate the best terms in whatever marriage the two eventually end up in.

Much of the belly-aching around the timing and the pricing of any takeover of Take-Two by Electronic Arts has to do with the forthcoming release of ‘Grand Theft Auto IV,’ and the huge sales it will likely produce.

(Credit:
Take-Two Interactive)

First they worked on a possible deal behind the scenes and when EA didn’t hear what it wanted from Take-Two, they took their offer public. Take-Two didn’t like the money that was put on the table, so they pushed it away. EA made a hostile tender offer. Take-Two’s board now urges shareholders to reject it. And on and on and on.

Nothing’s really changed: EA wants to pay less; Take-Two wants more. EA wants to close the deal before Grand Theft Auto IV is published. Take-Two thinks it can hold EA over a barrel because of the game’s forthcoming release.

Yet everyone seems to agree that one way or another, Take-Two needs to get bought and that EA is probably a good buyer.

I’m reading reports on the kerfuffle in which respected video game industry analysts say Take-Two has to take the offer or it’ll be too late. Or maybe they don’t, because EA will extend the date of the expiration of their tender offer. Or maybe Microsoft will come in and buy both companies since they don’t seem to be making much progress on gobbling up Yahoo. Okay, I made that last one up to see if you were paying attention.

But basically, I just want to tell EA and Take-Two and every other set of companies that decides the best way to achieve their selfish takeover goals is to use the press that, well, I don’t want to be used.

These companies are masterful at putting out self-serving releases that they know reporters will swallow, and then they refuse to make executives available for any kind of follow-up questions. I don’t expect anything to change because of this rant, but come on: Stop using the press to try to achieve what you should be doing on your own. Get your highly-paid keisters into a meeting room. Order some takeout. Lock the doors. And work this out yourselves.

Update (12:36 p.m. PDT): Wellll, at the risk of being the mouthpiece I’ve said above that I don’t want to be, here’s EA’s statement on the Take-Two board’s rejection of the hostile tender offer:

“It is regrettable for stockholders that Take-Two’s board of directors has not accepted EA’s offer. EA believes that a combination of EA and Take-Two is in the best business interest of all parties.

“EA’s offer price of $26 per share is full and fair, and reflects the value of Take-Two’s intellectual properties, talent, and operational progress. EA’s all-cash, tender offer commenced on March 13 is the most certain way to create stockholder value, and represents a 64 percent premium over Take-Two’s closing stock price on February 15, the last trading day before EA sent its revised proposal to Take-Two.

“EA’s tender offer is a clear process for Take-Two stockholders to maximize the value of their investment. By advising its stockholders to reject the offer, Take-Two’s board is exposing them to further delays which may reduce the value and the certainty of a potential transaction.

“EA’s tender offer is currently scheduled to expire on April 11, 2008.”

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Over on The Open Road, Matt Asay analyzes the price paid for three open-source companies: MySQL (bought by Sun Microsystems earlier this week), JBoss (Red Hat), and Zimbra (Yahoo). He concludes that depending upon the revenue assumptions, whether you use trailing or forward-looking revenue numbers, and whether one looks at bookings rather than revenue, the valuations for all three were somewhere in the 15 to 20 times annual revenue range.

This is a big multiple. By contrast, Oracle is paying a multiple of about 4 times for BEA Systems–and some analysts are saying that’s too high.

So is this just another bubble in which companies that are considered in the forefront of the Web or open source or whatever get snatched up for unjustifiable sums?

It is true that all of these companies could be considered category leaders. It’s clearly so in the case of MySQL (open-source database) and JBoss (open-source application server), so some premium might reasonably attach to their post position. Yet, one would think clear leadership would already be reflected in their revenue numbers, so that can’t be the whole story. Is there any other explanation–especially one that doesn’t require irrational exuberance?

I think so. As I wrote in the context of Sun’s acquisition of MySQL a few days ago, it’s hard for standalone, narrowly focused open-source companies to profit. A financial analyst on the Sun/MySQL call estimated that MySQL had annual revenues of $60 million to $80 million in 2007 and operated at about breakeven. Not bad, but considering that MySQL is widely regarded as one of the true open-source success stories, it’s hard to view those financial results as better than modest. At issue is that even with an enterprise version and value-add services–in addition to basic support–MySQL converts a small proportion of users into paying customers. That might be OK, but even when it does monetize users, it’s pretty much limited to selling them a subscription for its enterprise version–which is still a great bargain by historical proprietary database standards.

However, plug MySQL or some other open-source company into a larger organization and the opportunities increase enormously. In the case of Sun, each MySQL customer that is willing to pay for the Enterprise database is now also a potential customer for Sun professional services, servers, and other software. The same logic applies to JBoss and Zimbra with their respective owners although those paths to incremental monetization may be less clear–and, indeed, Red Hat has publicly admitted that, so far, it hasn’t leveraged its JBoss acquisition as well as it might have.

Although there are any number of small and profitable independent software vendors (ISV) in the proprietary software world, small software companies get gobbled up by larger vendors all the time of course. There’s often more value in integrated offerings than in point products. Enterprise are also more comfortable sourcing some types of products, such as high-level management tools, from large ISVs or system vendors.

But over and above all the reasons why it’s hard to make a profit as a standalone ISV, a look at the market suggests that it’s even harder in some ways for standalone open-source ISVs. It’s not that their product is any less valuable and it’s certainly not less desired. But it’s hard to monetize in a standalone way.

That could well be a reason for these high valuations. The value is already there but it takes a larger and more diverse organization to supply the leverage that makes money off that value.

I don’t mean to burst anyone’s bubble, but anyone looking to the U.S. presidency to make any material difference for open source needs to pass the bong around one more time. It’s not going to happen.

I personally could not possibly care less whether John McCain or Obama use Linux. It has never entered my mind. I’m much more concerned with their policies on domestic and international issues, like health care, Iraq, etc.–you know, things that have the potential to help or hurt lots of people.

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If a U.S. president has limited impact on the economy–you and I impact the economy more than a presidential speech because we’re the ones working, saving, and starting new businesses–then why would we expect them to make much of a dent on technology policy? Would I like McCain and Obama to use open source? Sure. I’m just not going to think about that when I vote.

Yes, there are things that a president can do to create an atmosphere accommodating to open source, or other technology choices like Net neutrality. But let’s be clear: there are far bigger issues in front of the U.S. president than whether the government adopts open source (and, regardless, the U.S. government is already adopting open source at a rapid pace, so who needs a presidential preference for open source?).

I’ve seen a lot of noise over the past year about which presidential candidate would be best for open source, most recently this blog post in TechRepublic suggesting that Barack Obama would be better for open source.

The day ends, and the next day, Dad says, “This time I really mean it. Clean up your room today, or there’s going to be hell to pay.”

“Extending our offer will allow the (U.S. Federal Trade Commission) review process to continue,” said Owen Mahoney, EA’s senior vice president of corporate development, in a press release. “EA’s offer price remains unchanged at $25.74 per share and our offer is still subject to conditions that include regulatory approval.”

So, Take-Two wants more than the $2 billion EA is offering. Good for Take-Two. I certainly don’t have any inside dope on the company’s financials and whether or not it can succeed without EA’s money, but from here, Take-Two is looking pretty solid right now.

Note: On June 10, Geek Gestalt hits the highways for Road Trip 2008. I’ll start in Orlando, Fla., and visit many of the South’s most interesting destinations. Stay tuned, and be sure to keep up, both now and during the trip, with what I’m doing on Twitter.

But the offer also did not take into consideration a new movie deal Take-Two signed with Universal Pictures to have its game, Bio-Shock, turned into a movie.

“I don’t want to,” retorts the rebellious teen. “I don’t have to.”

This, of course, after an earlier deadline of February 22 had passed and was also extended.

In return, Take-Two does nothing, though in the interim, its new game breaks every short-term entertainment industry sales record. That’s sort of like winning the science fair the same night as refusing to clean your room.

(Credit:
Rockstar Games)

“If you don’t clean up your room today, you’re going to be in trouble,” yells Dad.

To be sure, EA had figured in an expected large infusion of cash from GTA IV sales into its original offer. But no one figured on the game bringing in more than $500 million in its first week. Right there, that was a quarter of what EA is bidding for all of Take-Two.

And then, just like a parent who has lost credibility for not sticking to his or her guns the first time, EA said this morning that it has now decided to extend the deadline for Take-Two’s board to accept its $2 billion takeover bid to June 16. Most recently, the offer had expired at 11:59 p.m. on May 16.

Electronic Arts said Monday that it is once again extending its $2 billion offer for ‘Grand Theft Auto’ publisher Take-Two. Take-Two retorted by rejecting the offer.

As for EA’s new June 16 deadline, I’m thinking that it has all the meaning of, well, its last two deadlines. Which is to say, almost none.

Rather, it was couched as a procedural move.

Right. To me, this is like Dad saying, “Well, okay, I’ll give you another day to clean your room, but only because I’m waiting for Uncle Charlie to decide if your room is clean enough already.”

This is becoming rather ridiculous. It’s obvious to everyone that EA cannot let Take-Two go, and meanwhile, Take-Two is sitting pretty, counting its new millions.

In response, Take-Two’s board said Monday morning that it was once again rejecting the bid.

I’m very sure that EA’s announcement this morning that Take-Two can still accept its offer had nothing at all to do with the fact that EA desperately wants to own the GTA franchise and get the keys to the bank account with the Scrooge McDuck money bin quantities of GTA IV loot.

This is exactly what the dynamic between Electronic Arts and Grand Theft Auto IV publisher Take-Two feels like: EA yells, “We’re offering to buy you, but you have to decide by our artificially imposed deadline.”

The malicious link, which includes “xp-vista-update” in the URL, is copied into the clipboard and can not be over-written by copying new text to the clipboard. Users must reboot the computer to remove the link, The Register reports.

“Someone wrote a little piece of Adobe Flash code to copy text to the clipboard. Then they put it in a loop, to do it once a second. Then they put it in an innocent-looking flash-based banner ad, with their harmful URL as the payload. Then they signed up for some advertising networks, and submitted their bad ad, presumably paying considerable $$$ to get it featured on sites that you and I visit regularly, such as MSNBC and Digg. And when someone has this ad loaded, they can copy all they want, but everything they paste will be just that URL. So if you are writing an e-mail to Aunt Millie, telling her to look at your eBay auction located at (paste), or to download Picasa to organize her photos - download here (paste), she’s going to get the virus when she visits the bad site.”

The malware appears to affect
Mac, Windows, and Linux machines and
Firefox, Internet Explorer, and
Safari browsers, according to ZD Net’s Zero Day blog.

Chris Thornton, who created the “ClipMate” clipboard extender for Windows, gave an interesting description of the situation on his Clipboard Extender Dot Com blog:

A new type of Internet-based attack is spreading in which Flash-based ads seize control of a Web surfer’s clipboard and paste in a link to a malicious site in the hopes that it will be spread from there into e-mails, blogs, and instant messages.

The ads have been spotted on MSNBC.com, Newsweek.com, and Digg.com, and victims have reported on numerous forums and blogs that they appear to be fake alerts that a virus has been detected on the computer and offer to clean it up, according to antivirus vendor Sophos.

commentary

If Microsoft could have solved its advertising and content problems organically, it wouldn’t have been forced to make an outsize and humbling bid of former web wunderkind Yahoo. It’s not exactly short of cash, people or need. To say that it now has the magic solution is, let’s just say, the triumph of hope over recent experience.
If Yahoo really had in place the pieces to make a run at being … something, we wouldn’t be seeing the key employee attrition and weak revenue/traffic growth that we currently see. After all, the only thing that saved Yahoo’s earnings bacon in the just-completed quarter was money gifted from Alibaba gains. It wasn’t a changed company that did it, and wasn’t the magic of Jerry Yang.

The future is open. Google “gets” that. Yahoo! “gets” that. Microsoft? Not so much.

As for Microsoft’s (and Yahoo!’s) insistence that they can go it alone, Paul Kedrosky’s suggestion to the contrary is spot on:

But it would have given Microsoft leeway to compete on a broader platform than .Net and other Microsoft technologies, which both pave the way for its success…and ultimate irrelevance.

Microsoft has officially pulled out of its offer for Yahoo!. With Yahoo! goes Microsoft’s best chance to transform its culture and technology to become more open. With Microsoft goes Yahoo!’s best chance to get the resources and ambition it needs to grow strongly again.

The two needed each other. To be fair, I don’t think Microsoft would have gained much in terms of search or web momentum from Yahoo!, because combining two second- and third-place competitors rarely yields a first-place winner, unless it somehow solves their core deficiencies. In the case of Microhoo, it would not have resolved the two companies fundamental inability to wage a strong battle with Google.

Perhaps Microsoft doesn’t want anyone using the uber-cool (and getting cooler all the time) AwesomeBar?

At least Microsoft is finally recognizing that there are technologies beyond those that it develops. It seems like a small thing to suggest that its site visitors could try something other than IE, but for me this marks a significant step forward for the software giant.

But now? As discovered by iTnews, Microsoft is now asking Mac and Windows users to use the open-source Mozilla
Firefox browser, albeit a slightly outdated version (2.0).

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Microsoft used to tell
Mac visitors to its web pages to use Internet Explorer. When the company stopped developing IE for the Mac, it instead suggested that “Macintosh users migrate to more recent web browsing technologies such as Apple’s
Safari.”

New March sales data from NPD Group reveals that video game sales are finally being hit (and hit hard) by the recession. Despite a strong showing through February, March sales across the board dropped by 15 percent to 18 percent year over year from 2008 to 2009.

So, is it time to panic? Probably not. There has been a dearth of new hit titles and the
Nintendo Wii and Nintendo DS (arguably both less expensive in terms of console and games) are the dominant platforms. Analysts have also suggested that with such a meteoric rise over the last year, the market was due for correction.

Follow me on Twitter @daveofdoom

As reported on
Gamespot.com:

US VIDEO GAMES INDUSTRY - MARCH 2009
Software: $792.83M (-17 percent)
Hardware: $455.55M (-18 percent)
Accessories: $185.67M (-15 percent)
Total Games: $1.43B (-17 percent)

Although unnerving on their own, NPD’s March numbers also signaled a more alarming trend. When taken into account, the month’s numbers caused 2009’s first-quarter game sales to go from solid growth to a near flat line. For the January-March period, the U.S. game industry generated $4.25 billion, barely up from the $4.24 billion that it generated during the same period in 2008.

On the one hand, this sort of change reflects just how accessible computer technology has become. It almost goes without saying (although a couple of longtime lodge guests were a little bit surprised) that I’m sitting here typing this via a Wi-Fi connection. However, it’s also a reminder that change–even when generally positive–can have its downsides as well, even if they’re small. As this article about the new Alta Cards notes: (See the article for a picture of the old ticket.)

Still, if you contrast the selective use of RFID to the ubiquity of barcodes, the contrast is striking. It’s arguably just a normal technology adoption curve–”valley of despair” and all that–but that doesn’t make it any less disappointing for its proponents. In general, at least from the supply chain angle, RFID is so far mostly focused on goods that are either high-value individually (such as parts for Boeing’s 787 Dreamliner) or in aggregate (such as full pallets of less expensive items).

While much will be gained in the way of comforts and convenience, with the phasing out of the conventional passes, Altaholics will unfortunately have to say goodbye to one of the mountain’s richer traditions: the personalized messages printed below that classic Alta-red banner on the tickets, denoting various “special days” celebrated at Alta.

“We’re going to feel a sense of loss and change, not only those within the company, but our guests, too,” (Connie Marshall, Alta’s director of sales and public relations) says. “A vestige of personalization at Alta, people would even call ahead to request this service.”

Thus it was with both interest and some amusement that I discovered Alta in Utah (where I’m skiing this week) now using RFID for its lift tickets, replacing the familiar sticky paper and metal “wicket” that are still the most familiar form of ticket to most skiers. You put this plastic RFID card in a jacket pocket (preferably away from credit cards and electronics) and a little gate swings open at the lift if you have a valid, paid ticket.

Radio frequency identification, a technology that allows identification of objects using radio waves, hasn’t exactly been a failure. The Wikipedia article on RFID lists all manner of examples of RFID use, ranging from the whimsical to the more substantive. And early proponents of RFID, such as Wal-Mart and the U.S. Department of Defense, have moved ahead with large-scale RFID deployments affecting both themselves and their suppliers–albeit at a slower pace and in a more limited way than originally envisioned.

So why amusement? Well, this is perhaps one of the unlikeliest of ski areas to implement such a relatively cutting-edge technology. (Its use at a variety of ski areas mostly in France and Ski Dubai notwithstanding, it’s still uncommon.) Because Alta is…Alta.

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This is, after all, one of three ski areas in the U.S. that still doesn’t allow snowboarding. The lodge where I’m staying was originally constructed by the WPA. The wife of a Dartmouth friend of mine describes an Alta ski vacation as something akin to “boot camp.” It doesn’t require quite as much traversing (aka climbing) to get from lift to lift as it did in past years, and the Alta Ski Lifts Company has upgraded some lifts here and there. Still, it’s perhaps seen less change than any other American ski resort of comparable stature in the past decades.

It’s a nifty system. It’s “hands-off,” so there’s no need to stick a card with a magnetic strip into a reader–a fairly common system at a variety of ski areas. They’ve also developed a system with a swing-out gate rather than an annoying turnstile. Furthermore, the card can be refilled online and can easily accommodate pricing schemes such as multi-day discounts within a given time period and the like. (Although the current scheme is fairly bare-bones.)

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View the latest prices for HP 2009m

The LG Flatron W2053TQ mocks you with its aspect ratio.

OK, the last one was a fib (”Transformers” on the brain this week), but if you really wanna know what I think of these two check out the reviews. Also take a look at the LCD computer monitor hub, for all things, well, LCD computer monitors.

This week I take a look at the HP 2009m and the LG Flatron W2053TQ. Both are 20-inchers. Both include a 16:9 aspect ratio, which translates to 1600×900 resolution. Both also transform into kid-size robots and battle it out for your entertainment.

A couple of months back, I asked what I thought was a pretty good question about the need for a 16:9 aspect ratio on a 20-inch monitor.

While I still feel there’s little need, if any, for 16:9 on such a small screen, that doesn’t mean said monitors can’t be useful in their own right.

(Credit:
Corinne Schulze/CNET)