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Macquarie Research maintained a Neutral rating on Microsoft (NASDAQ:MSFT) after closely monitoring reports and developments around the proposed MSFT/ATVI deal.
Analysts there wrote in a note, “The news batch was broad and disparate in terms of relevance, but in totality we believe the events of the past week(s), together with our own assessment of possible motivations and the possible relevance of corporate actions lead us to conclude that MSFT – no stranger to legal battles over 3 decades and counting – is more committed than ever to closure, and recent actions suggest the battle may be just slightly less uphill than many – including ourselves – had previously concluded. Further, our conversations with antitrust attorneys lead us to believe that how MSFT chooses to approach the CMA will be precedent-setting for 1) the Company’s future ability to deals; 2) that of the broader sector; 3) the role of the newly emboldened CMA, which has adopted a largely anti-M&A posture in its early days. Specifically, we highlight 3 key observations of note that keep us constructive on closure and affirm our belief in MSFT’s commitment.”
On Tuesday (221), MSFT executives confirmed over Twitter that they had signed a binding 10-year contract to bring the Call of Duty to the Nintendo franchise. This concession signals MSFT’s willingness to work with competitors, serving on the margin to counter claims to the contrary being made by Sony (NYSE:SONY).
Reports on Monday and Tuesday in tech e-journals (such as TechCrunch) reported that unknown hackers had stolen some data from Activision Blizzard Inc (NASDAQ:ATVI), data purportedly stolen from Activision, including the schedule of planned content to be released for Call of Duty. While not directly related to antitrust law, on the margin this could bode well for MSFT, as regulatory agencies are nominally charged with consumer protection, and given MSFT’s presence in cybersecurity, the absorption of Activision into the company could potentially reduce future data breaches.
Over the last week, some tech ejournals have noted that a Sony corporate jet visited Seattle last week, if true – it would be the first visit in 18 months. This could be pure coincidence, or it could be a sign that conversations may be resuming between Sony and Microsoft.
The analysts believe this situation could be more fluid than investors had thought over the past months, and believe it bears watching.
Shares of MSFT are down 0.56% near end-of-day trading on Wednesday while shares of ATVI are up 0.19%.
