I'll admit, my knowledge of financial markets is provincial, at best. Can someone with more savvy answer me this: is it normal for a company that has seen consistently eroding profits to be spending lavishly on takeovers? Is that a usual solutuion to that kind of problem? 

well, we know that this industry is consolidating because of eroding margins. you just HAVE to get bigger.

EA, last quarter, despite a paper loss last quarter, i think there was some one-item charge of something related to online gaming. i think if you remove that, they're still making money, though i might be wrong regarding that.

mergers, takeovers, they're not really that different from a company's standpoint. you're just paying for future cash flow, it's not like you're throwing money away. of course, if you pay too much then you threw some money away.

growing bigger by acquisition is pretty typical. Bank of America is the biggest example of doing it right.

In my opinion EA problem is that they had build their empire in last 7 years upon sequel only.

I think that EA has lost its creative force relying on heavy serialization. They failed to soundly read the new casual market , missing DS train and overlooking the Wii at launch. In a disruption age, EA need creative studios that build new treadmark.

They have the cash to do this acquisitions and they try to do them to  mantain their leadership in the software market.

Oh god no. Since I was LITTLE EA has been buying out and destroying every maker of my favorite games :(

Even if a game is good, just it being an EA game makes me hesitant to buy it. I don't want them to have my money.

 Yeah. The idea is to expand or die. With the acquisition/merger the idea is to create synergies that will lead to reduction of overhead and better profit margins. Markets tend to become monopolies without government intervention for this reason (and others).

I blame WiiFit! Lol...

On a more serious note:

Take2 already denied the offer. Saying that they think it is 'highly oppertunistic' of EA to make such an offer just before the release of GTA. Take two has offered to enter discussions 1 day after the release of GTA4! 

Clear talk if you ask me! And Pfeeewh! Catastrophy avoided! 

Well, not exactly. We'll have to see what the stock price does today. EA can start buying up stock on the open market, make a tender offer, force a shareholder vote, etc. There's a post above on this page quoting Pachter as saying that it's likely that TTWO will be acquired by ERTS. Stay tuned.

Nooooo, please God, don't let this happen. They will own 2K Sports, so no more competition for sports titles, just like Madden. I don't know what I'd do with no more 2K Hockey, I can't stand EA's NHL games. Do you have to own every frakin company EA?

Did anyone here listen to EA's conference call about it?

 It looks like it's happening. Take Two stock (TTWO) opened at $25.70. I believe the market thinks this acquisition is going to take place. Well see what the stock does throughout the week.