Dividends and US blocks Microsoft’s $69 billion bid for Activision

In the world of business, we often believe that because a large corporation makes an offer to buy another company it will eventually go through. Some shareholders may ask for a higher price, but generally the offer will go through. We often believe this because in every large corporation there are teams of people who examine potential mergers and acquisitions on a regular basis. The teams report to the President and when an offer is made, outside legal and banking talent are working to ensure the potential merger passes the legal concerns and funds are available to pay for the acquisition. The group also stays abreast who the largest shareholders are for their company and the one they will potentially buy. In seems Microsoft’s groups missed one element in the planning process – ensure governments are on your side. When a merger is announced, the public and interested groups – both pro and con, will try to attached themselves to the best outcome.

In an article by David McCabe and Kellon Browning of the New York Times News Service, the British antitrust regulators dealt a major setback to Microsoft and giving a win to the government enforcers around the world who want to rein in Big Tech.

Most people know the cloud in relationship to corporate users and the growth of cloud services with Amazon, Microsoft and Google. Another cloud service is the gaming industry and with the gaming industry the spend is similar to what people spend on Hollywood movies. The technology allows people to stream games to their devices without the need for special devices to play the game, such as gaming consoles.

In the British decision, there were hints at reigning in Big Tech or the era of easy blockbuster deals by tech giants is over.

Microsoft was hoping to combine Microsoft’s Xbox console and video game subscription with Activision’s games such as Call of Duty, World of Warcraft, and Candy Crush. Microsoft has more than 25 million subscribers for its gaming services.

Cloud gaming is relatively new, but the projections are to be worth $1.3 billion in the UK and $14 billion globally by 2026. Cloud gaming does encounter frequent glitches and requires a strong WiFi connection. However, every year the big communication companies such as Verizon make WiFi easier to connect to.

Linking to dividend paying stocks, all companies do mergers and acquisitions, the larger the number, one would expect the more work has gone into ensuring the shareholders of the proposed company and the government regulators are on side before announcing. In our information society, there will be more pros and cons heard by the government regulators because it is relatively easy to make submissions and the pros and cons reflect sentiment in the news. In this case, are Big Tech companies too big? do they have too much power? There are plus and minuses to the questions, but it is up to the company to deal with regulators and allow competition to occur. In many semi-monopoly industries, the regulators are often on the side of the industry which helps the companies maintain profits to pay dividends. One example is the electrical utility regulators which often raise rates every year. Companies often have short term outlook to ensure their quarterly results are steady and growing, government regulators can look years out, but politicians have a very short time period which means corporately it is balancing act. How does your management manage the balancing act?

There are more questions than answers, till the next time – to raising questions.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s