Day 1 under new ownership is looking as predicted.
EA plans to cut more than half a billion dollars in yearly operational costs under the new ownership. The official Press Release from Andrew Wilson on the topic of EA buyout only included, well, PR talk. Including a public message for the press and a private message for their employees - made public.
What hasn't been stated publicly and was shared only to investors is the upcoming plan to cut $700 million in annual costs. Including $170 million in "organizational efficiencies". Professional gaming reporter for Bloomberg Jason Schreier described it as another way of saying "mass layoffs".
Read Jason's full statement below:
EA officially goes private tonight, meaning:
EA will no longer trade on the NASDAQ for the first time in 36 years
All stockholders of EA (including many employees) will receive $210/share
EA will take on $18 billion (!) in debt, putting it on the hook to pay ~$1.8 billion/year in interest
EA's annual Ebitda is around $1.5 billion, which should be enough to service the interest payments. But the publisher has told debt investors that it will cut $700 million in annual costs including $170 million in "organizational efficiencies," per Bloomberg. In other words: mass layoffs
We know that EA is eager to add AI to their employees day-to-day workflow. But as suspected with the initial reports and analysis of how this buyout is going to go, there will be layoffs. If $170 million of relief in organizational efficiencies include the reported mass layoffs, we're looking at around a thousand jobs lost.
And that's included in the full $700 million annual cost sum, out of which $530 million yet have to be specified and revealed as the time moves on.
We'll keep you updated as the story further develops on the post-buyout future of Electronic Arts. EA News is the main cornerstone for all buyout news, reports and stories.
3 Comments
MsMoBear
$1.8 billion in annual interest with only $1.5 billion in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization aka cash-generation from operations with specific cost exclusions) explains why these cuts are so deep. They don’t have sufficient earnings to cover the debt cleanly, so they’ll have to trim a lot of financial fat to service their debt. This might include IP sales as well.
Wish I could say this is a surprise, but I’m not. Leveraged buyouts typically come with debt for the company being bought out. All so an wealth investment fund and two private equity firms can get a little richer.
XnixnBvg
Disgusting. Honestly, I expected nothing more from this company. Was the greed worth it? Because now you sold yourself to the devils.
User
Reply to XnixnBvg
EA was the devil all along nothing changed.
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3 Comments
$1.8 billion in annual interest with only $1.5 billion in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization aka cash-generation from operations with specific cost exclusions) explains why these cuts are so deep. They don’t have sufficient earnings to cover the debt cleanly, so they’ll have to trim a lot of financial fat to service their debt. This might include IP sales as well.
Wish I could say this is a surprise, but I’m not. Leveraged buyouts typically come with debt for the company being bought out. All so an wealth investment fund and two private equity firms can get a little richer.
Disgusting. Honestly, I expected nothing more from this company. Was the greed worth it? Because now you sold yourself to the devils.
Reply to XnixnBvg
EA was the devil all along nothing changed.
Welcome to Sims Community!
Our community is about connecting people through open and thoughtful conversations. We want our readers to share their views and exchange ideas in a safe space.
In order to do so, we've created a simple set of rules that will improve your experience. Simply put, keep it civil.
Your post will/might be rejected if it contains:
User accounts will/might be blocked if we notice:
So, how can you be a power user?
Thanks for reading our community guidelines. Please note that we're aware of certain issues with Sign In / Log In and Create Account / Email Confirmation issues. We're working behind-the-scenes on a new Account Creation process. Thank you for your patience and remember - freedom of speech is not freedom of reach