Gerrit Smit, fund manager of the Stonehage Fleming Global Best Ideas Equity Fund (GBI) and holder of Microsoft.
This deal provides Microsoft Gaming full access and control over gaming content generation, and therefore accelerates their growth potential in this field on all of mobile, PC and console devices.
Further to this, and very importantly, with their own expertise on the meta-verse, they can now create a multi-faceted meta-verse of gaming and wider entertainment with a good chance of becoming a leader in this new field. This deal can possibly put Microsoft very early in the lead with a complete and self-sufficient future meta-verse entertainment business.
They have good synergistic benefits in terms of software development and applications, and further growing the utilisation of Azure (Microsoft’s cloud business). The outstanding engineering talent in Microsoft can add huge additional value to games.
With the low interest rate they currently earn on their cash, and the relatively fair valuation they pay, the deal can be immediately accretive to earnings on completion. If well managed, and we have little reason for doubt, this one plus one can add up to well over three over time.
Microsoft is at the forefront of designing and utilising the phenomenal growth in the fourth industrial revolution. Whilst the provision of solutions in artificial intelligence, cloud computing, big data, the internet of things and cyber security are the growing future business drivers, in the interim Microsoft is totally entrenched in business and people’s private lives. It is a strong cash generative business which is leading the design of new technologies, in turn driving the economy. To illustrate the result of its success, the share has compounded close to double digits since its peak at the end of 1999 preceding the burst of the technology bubble.
