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Microsoft and Activision Blizzard: A Perfect Match?
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In early 2022, tech-titan Microsoft (MSFT - Free Report) made a major splash, announcing the acquisition of Activision Blizzard for roughly $70 billion. It was a massive deal that caught extensive attention, ranking as the largest acquisition in the video game industry’s history.
Activision Blizzard is a leader in video game development and an interactive entertainment content publisher, most well-known for Call of Duty. MSFT already owns two massive video game titles, Halo – the company’s flagship video game, and Minecraft – the best-selling game of all time.
MSFT intends to publish ATVI’s video game titles onto its Xbox Game Pass, a unique gaming service that allows gamers unlimited access to a library of games for a flat monthly rate.
The real prize for Microsoft is King (acquired by ATVI in 2016), a leading developer for the mobile gaming industry with a library that includes over 200 games. A few recognizable names in this library include Candy Crush, Pet Rescue, Bubble Witch, and others. This is a major win for MSFT, as mobile gaming has become the biggest and fastest-growing segment within the industry and should lead to further revenue generation.
The acquisition hasn’t been a smooth transaction by any means; in late December last year, the Federal Trade Commission (FTC) sued to halt the acquisition. Then, in June, the FTC filed a federal lawsuit with the same goal. Many are weary, particularly Sony (SONY - Free Report) , that Microsoft’s acquisition would give the company an unfair advantage in the video game industry. Though, MSFT has refuted these claims and has even announced plans to bring the hit Call of Duty title to Nintendo (NTDOY - Free Report) gamers.
Microsoft seems to have gotten the last laugh, as a federal judge ruled against the FTC on Tuesday, opening the doors for the acquisition to finally go through. Market participants took note of the favorable ruling, with ATVI shares closing 10% higher in Tuesday’s session.
Still, there remains one more hurdle; the Competition and Markets Authority (CMA) of the UK previously blocked the acquisition. Following the ruling news from the United States, however, the CMA stated that it’s open to considering changes and has put the legal battle on hold.
Microsoft’s Gaming segment generated roughly $16.2 billion in FY22, improving nearly 6% year-over-year. For the company’s current fiscal year (FY23), the Zacks Consensus Estimate for the Gaming segment stands at $15.6 billion, reflecting a pullback of 4% year-over-year.
Microsoft’s Upcoming Earnings
The tech-titan is scheduled to unveil its next quarterly release on July 25th. Analysts have been positive surrounding the upcoming quarter, with the $2.55 per share estimate being revised nearly 5% higher since April and reflecting 14% growth from the year-ago quarter.
Image Source: Zacks Investment Research
In addition, our consensus revenue estimate presently stands at $55.4 billion, implying a positive change of 6.7% year-over-year. It’s worth noting that the quarterly sales estimate has been revised 1% higher since April.
Image Source: Zacks Investment Research
Bottom Line
After a long battle, it appears that Microsoft’s (MSFT - Free Report) acquisition of Activision Blizzard could soon be nearing the finish line.
Still, it’s critical to note that the UK CMA remains a bump in the road, but the legal battle has been placed on hold following the decision out of the United States.
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Microsoft and Activision Blizzard: A Perfect Match?
In early 2022, tech-titan Microsoft (MSFT - Free Report) made a major splash, announcing the acquisition of Activision Blizzard for roughly $70 billion. It was a massive deal that caught extensive attention, ranking as the largest acquisition in the video game industry’s history.
Activision Blizzard is a leader in video game development and an interactive entertainment content publisher, most well-known for Call of Duty. MSFT already owns two massive video game titles, Halo – the company’s flagship video game, and Minecraft – the best-selling game of all time.
MSFT intends to publish ATVI’s video game titles onto its Xbox Game Pass, a unique gaming service that allows gamers unlimited access to a library of games for a flat monthly rate.
The real prize for Microsoft is King (acquired by ATVI in 2016), a leading developer for the mobile gaming industry with a library that includes over 200 games. A few recognizable names in this library include Candy Crush, Pet Rescue, Bubble Witch, and others. This is a major win for MSFT, as mobile gaming has become the biggest and fastest-growing segment within the industry and should lead to further revenue generation.
The acquisition hasn’t been a smooth transaction by any means; in late December last year, the Federal Trade Commission (FTC) sued to halt the acquisition. Then, in June, the FTC filed a federal lawsuit with the same goal. Many are weary, particularly Sony (SONY - Free Report) , that Microsoft’s acquisition would give the company an unfair advantage in the video game industry. Though, MSFT has refuted these claims and has even announced plans to bring the hit Call of Duty title to Nintendo (NTDOY - Free Report) gamers.
Microsoft seems to have gotten the last laugh, as a federal judge ruled against the FTC on Tuesday, opening the doors for the acquisition to finally go through. Market participants took note of the favorable ruling, with ATVI shares closing 10% higher in Tuesday’s session.
Still, there remains one more hurdle; the Competition and Markets Authority (CMA) of the UK previously blocked the acquisition. Following the ruling news from the United States, however, the CMA stated that it’s open to considering changes and has put the legal battle on hold.
Microsoft’s Gaming segment generated roughly $16.2 billion in FY22, improving nearly 6% year-over-year. For the company’s current fiscal year (FY23), the Zacks Consensus Estimate for the Gaming segment stands at $15.6 billion, reflecting a pullback of 4% year-over-year.
Microsoft’s Upcoming Earnings
The tech-titan is scheduled to unveil its next quarterly release on July 25th. Analysts have been positive surrounding the upcoming quarter, with the $2.55 per share estimate being revised nearly 5% higher since April and reflecting 14% growth from the year-ago quarter.
Image Source: Zacks Investment Research
In addition, our consensus revenue estimate presently stands at $55.4 billion, implying a positive change of 6.7% year-over-year. It’s worth noting that the quarterly sales estimate has been revised 1% higher since April.
Image Source: Zacks Investment Research
Bottom Line
After a long battle, it appears that Microsoft’s (MSFT - Free Report) acquisition of Activision Blizzard could soon be nearing the finish line.
Still, it’s critical to note that the UK CMA remains a bump in the road, but the legal battle has been placed on hold following the decision out of the United States.