Leave it to the originators of Lara Croft, British game maker Eidos
Having suffered a while from disappointing sales and product delays, Eidos finally made the decision to sell itself, accepting a cash offer of $135 million from Elevation Partners (a U.S. group). That represents a humbling $0.95 a share -- clearly better than the low of $0.55 set in mid-March, but a far cry from the lofty levels seen back in 1999.
Well, a funny thing happened. Like a plot twist out of one of its games, a new suitor emerged.
SCi Entertainment group, a British maker of game software, offered a competing bid of $145 million in stock.
Aside from the higher valuation, there is also a nationalistic aspect to the SCi bid. Brits are quite rightly proud of their part in the history of game software. Take-Two's
No matter who wins, the Eidos saga offers some important lessons. First, it's not enough to be cool. The only real key to long-term success in the stock market is sustainable profitability, no matter how cool a company's present (or past) products are.
Second, it's really hard to build a sustainable long-term business in an industry that is as fickle as game software, where you're only as good as your last hit. Although Eidos had some other good games (like the Thief series), it's still known as the Tomb Raider company, and though it produced many successful sequels and two movies, that game was first released back in 1996.
Whoever wins the battle for Eidos, it's clear that its days as an independent company are over. So, in memory I'll be firing up Tomb Raider one more time and indulging in a little escapism. But I'll also be sure to take at least one lesson to heart -- while it's perfectly fine to ride a popular product and stock on the way up, make sure you actually lock in some of those gains before the bloom is off the rose.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long, nor short the shares). He's never owned Eidos, but is a fan of Tomb Raider and Thief.