Codemasters is wildly optimistic if it believes an IPO is possible in 2009

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You may be forgiven for having missed this interview with Rod Cousens of Codemasters in the Financial Times on Boxing Day last year.

Rod says that the company, majority-owned by private equity firm Balderton Capital, is in a position to float but the markets weren’t receptive; if they rebound in 2009 or early 2010, Codemasters will be ready.

I think that Rod is being wildly optimistic:

• Venture-backed IPOs are at an all time low – only six venture-backed businesses floated in the US in 2008, the lowest since the Seventies
• Eidos, the leading comparable for Codemasters in the UK, endlessly disappoints (see Eidos issues profit warning, risks breaching bank covenants), meaning UK investors are deeply sceptical of the industry
• Although the company is better managed than it was under the Darlings and revenues are growing 40% year on year, it has yet to create any new franchises and is reliant still on racing games Colin McRae and Race Driver
• While the company has had success in the online space, this is a licensee of third-party MMOs such as Dungeons & Dragons Online and The Lord of the Rings Online.

All of this points towards a games company that is better managed than in the past but is currently more of a services company, exploiting other people’s intellectual property, rather than a creative powerhouse.

The revival of Operation Flashpoint may be a step in the right direction, but irrespective of that, the markets seem likely to be closed to Codemasters for a couple of years at least.

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