News broke after market close yesterday that Microsoft is acquiring Activision Blizzard.
The acquisition puts many gaming franchises into Microsoft’s hands, including Call of Duty, Warcraft/StarCraft, Diablo, Tony Hawk, Candy Crush, and many others.
In recent years, Activision has grown its revenue and is generating healthy profits: $9B a year. Globally, the gaming market will continue to expand.
Microsoft (NYSE:MSFT) is paying a premium at $95/share ($74 billion) though analysts feel the valuation is reasonable. Less cash on hand, the true price is $68 billion. Microsoft is paying for an enterprise that is making 13% on this money ($9bn a year), and that doesn’t factor in growth or eliminating redundancies.
Microsoft also has the opportunity now to leverage Activision to make Xbox-exclusive content to drive hardware sales. Even Xbox-first or Xbox-premium content will assist.
Goldman Sachs says “Microsoft stated it see opportunities to be a key player in the future metaverse era.” While the “metaverse era” is presently somewhere between a pipe dream and an acid flashback, the move does position Microsoft to instantly be a leader in gaming.
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By purchasing Activision Blizzard, Microsoft seems to be attempting to obtain control of well-known gaming properties and establish itself as a dominant force in the gaming market https://geometrydashmeltdown.io