Needham analyst Mark May sent out a note today on the Glu Mobile-Superscape deal, and doesn’t sound too bullish.

Based on what we know now this acquisition does not make us more positive on GLUU at the moment for four main reasons:
-- i) SPS is growing slower than GLUU, and growth has slowed materially in recent quarters;
-- ii) SPS is losing money/burning cash today, though we expect GLUU mgmt will make an announcement at closing in a month or two about its plans to recognize cost synergies and make this deal accretive (so our current view is subject to change);
-- iii) excluding any potential cost synergies, GLUU is paying more on an EV/revenue basis (~1.7x) than it is currently trading (~0.6x); and,
-- iv) even with a 30% reduction in headcount and other overhead costs (our estimate), we estimate Superscape will only be at breakeven in 2H08, therefore we believe this deal is more about gaining revenue scale than helping GLUU advance profitability near-term