The Market News Reel for this week! Get the most important market news & updates for the week ahead! Major headlines, excerpts from news sources and a link to the full article are shown below. "Breaking Thoughts" section is purely our opinion.
Microsoft Buys Activision Blizzard for $69 Billion
"Microsoft Corp. plans to buy Activision Blizzard Inc. for US$68.7 billion, acquiring a legendary game publisher responsible for franchises like Call of Duty and World of Warcraft, but recently roiled by claims of sexual misconduct and discrimination.
In its largest purchase ever, Microsoft will pay US$95 a share in cash to add Activision’s stable of popular titles, helping the software giant expand its own offerings for the Xbox console and push it into the fast-growing markets for mobile gaming and the metaverse. The deal, which would make Microsoft the world’s No. 3 gaming company, also fits with Chief Executive Officer Satya Nadella’s strategy of focusing on content, community and cloud software.
Activision CEO Bobby Kotick, 58, will continue to serve in that role only until the deal closes, a person familiar with the deal said. Once the transaction is completed, the Activision Blizzard business will report to Phil Spencer, who, as part of the deal was promoted to CEO of Microsoft Gaming." - read more on BNN Bloomberg here
Breaking Thoughts: This is a massive deal and there are a lot of moving parts relating to markets, tech, strategy, and politics. For Activision-Blizzard's ($ATVI) shareholders, this deal relieves them from a year of pain as the stock had been crushed (falling over 50% from hits highs) due to harassments scandals, poor management, and game launch miss steps. Its management gets to leave in the best possible way, a golden parachute curtesy of Microsoft, without which some -including the CEO- likely would have had to resign at some point.
For Microsoft, the deal further strengthens their position in gaming (Xbox, Xbox Studios) making them 3rd largest after Tencent and Sony. It also gives them valuable IP and development potential for the future of the "Metaverse". A fight it is in with Facebook/Meta ($FB), Sony ($SONY), Apple ($AAPL), Roblox ($RBLX), and Snapchat ($SNAP) just to name a few. Over the next 5 years, someone's platform will come to dominate VR/AR, and having another major video game studio in its arsenal will certainly help Microsoft in that endeavor.
Will the deal actually be approved? That seems far less certain. Given both the rhetoric and certain actions coming out of Washington DC with regards to anti-trust legislation and the influence of "big tech" (including Microsoft) its hard to see them approving a horizontal tech merger of this size. The democrats have especially focused on the power of social media giants (Microsoft owns LinkedIn & Teams), with the prime target of criticism often being Facebook. Microsoft has been able to maintain a steady pace of Acquisitions over the last few years, almost under the radar compared to other tech giants. If it is able to acquire $ATVI, it is possible several of Microsoft's competitors begin to cry foul.
Major Earnings This Week
Tuesday January 18:
Bank of New York Mellon (BK): Expected Q4 earnings of $1.01 per share
Goldman Sachs Group (GS): Expected Q4 earnings of $11.76 per share
Interactive Brokers (IBKR): Expected Q4 earnings of $0.82 per share
Charles Schwab (SCHW): Expected Q4 earnings of $0.86 per share
Wednesday January 19:
ASML Holding (ASML): Expected Q4 earnings of $4.28 per share
Bank of America (BAC): Expected Q4 earnings of $0.76 per share
Intel (INTC): Expected Q4 earnings of $0.91 per share
Morgan Stanley (MS): Expected Q4 earnings of $1.91 per share
Thursday January 20:
Netflix (NFLX): Expected Q4 earnings of $0.82 per share
Travelers Companies (TRV): Expected Q4 earnings of $3.81 per share
Friday January 21:
Ally Financial (ALLY): Expected Q4 earnings of $1.95 per share
IHS Markit (INFO): Expected Q4 earnings of $0.83 per share
Major IPOs Expected This Week
none
See you next week!
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