Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Microsoft Corporation (MSFT) Seeking to Own Minecraft for $2.5 billion

Microsoft Corporation  (NASDAQ:MSFT) is bidding $2.5 billion for the ownership of the Swedish company Mojang AB whose main arsenal is the sandbox game Minecraft.  Tim Lesko of Granite Investment Advisors and CNBC‘s ‘Closing Bell’ panelists discussed the issue.

microsoft msft

“Essentially, for a $380 billion market cap company [Microsoft Corporation  (NASDAQ:MSFT)]  to buy something you know that has a $300 million in revenue and buying it for $2-$2.5 billion is not even 1% of the value of Microsoft Corporation  (NASDAQ:MSFT). So when you make an acquisition like that you kind of hope that it’s going to move the needle for such a big company and I just don’t see what that needle is […], ” said Lesko.

While there was uncertainty among the panel about what  exactly Microsoft Corporation  (NASDAQ:MSFT) was trying to achieve with this acquisition, a panellist shared an insightful thought about what Mojang could be worth to Microsoft after the Swedish company is integrated into the world’s giant software house.

According to CNBC, Minecraft currently has about 54 million users, which is a significant number in itself. This makes the team that developed Minecraft of high value in terms of human capital. With such experts on its team, Microsoft Corporation  (NASDAQ:MSFT) could better develop its  current products such as Xbox, Cloud and even its mobile division.

This means that Mojang is bringing immense growth incentive on the table for Microsoft, which is currently trading at about 13-14 times forward earnings multiples, explained the pannelist. Moreover, currently Microsoft Corporation  (NASDAQ:MSFT) has about $86 billion in cash and buying a thriving Swedish gaming company is a good use of its overseas foreign capital.

However, the software company’s angle on this acquisition is yet to be seen as is also this move’s ability to more than tick the mammoth company’s revenues which is an uphill task, to say the least.

Disclosure: none

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading...