The news at a glance
Videogames: EA pursues Take-Two; Credit cards: Visa’s IPO could break records; Banking: UBS sued over subprime bonds; Bonds: Rates soar as auctions fail; Software: Microsoft lifts the veil
Videogames: EA pursues Take-TwoVideogame maker Electronic Arts this week renewed its pursuit of Take-Two Interactive Software, said Benjamin Pimentel in Marketwatch.com. EA bid $2 billion, or $26 a share, for its rival. The move follows Take-Two’s rejection of a $25-a-share bid from EA in mid-February. Although EA hinted strongly that it “was prepared to take more aggressive steps to merge the two firms,” Take-Two’s board swiftly rejected the latest offer. EA is known for sports videogames such as Madden NFL, while Take-Two distributes the lucrative Grand Theft Auto series.
Take-Two could give EA a creative jolt, said Andrew Ross Sorkin and Seth Schiesel in The New York Times. According to “a growing chorus of criticism,” EA has lost its innovative touch and is increasingly relying on sequels. But Take-Two’s software designers, who relish their autonomy, could bolt in the event of a takeover. “Over the last decade, EA has acquired many high-profile game studios,” all of which “essentially dissolved after Electronic Arts tried to direct and homogenize their creative output.”
Credit cards: Visa’s IPO could break recordsVisa this week said its proposed initial public stock offering could raise as much as $19 billion, which would make it the largest IPO ever, said Madlen Read in the Associated Press. Although U.S. credit card default rates have jumped recently, Visa isn’t directly at risk, because like MasterCard, it is a credit card processor, not a lender. And it “has a strong presence in other countries where people are just starting to use plastic instead of cash.”
Banking: UBS sued over subprime bondsSwiss banking giant UBS just can’t shake off the mortgage crisis, said Bertrand Benoit and Haig Simonian in the Financial Times. After reporting a 2007 loss of $11.3 billion, largely because of mortgage woes, UBS now faces a massive lawsuit brought by a buyer of collateralized debt obligations that UBS structured, sold, and managed. HSH Nordbank, a German bank that specializes in shipping finance, is suing UBS to recover hundreds of millions of dollars it says it lost on its UBS portfolio. HSH accuses UBS of acting “wholly against our interests in its management of the investment.”
Bonds: Rates soar as auctions failA breakdown in “a large but obscure corner of the financial world” is saddling cities and towns with sharply higher borrowing costs, said Julie Creswell and Vikas Bajaj in The New York Times. Many U.S. municipalities sell bonds whose interest rates are set at auctions held by the banks that distribute the bonds to investors. Last week, “almost 1,000 of the auctions failed because there were not enough buyers” and the banks refused to act as buyers of last resort. When auctions fail, interest rates on the bonds automatically reset from the single digits to as high as 20 percent.
Software: Microsoft lifts the veilMicrosoft last week announced a broad series of moves aimed at unlocking its “tightly protected programs” and encouraging software makers to build add-on products, said Robert Guth in The Wall Street Journal. For the first time, software developers can download “key details” of Microsoft software in order to create services that function with Microsoft programs such as Vista, Word, and Excel. Until now, Microsoft had tightly guarded its software secrets, in order to keep more of the add-on market under its control.