The tech world is abuzz after Microsoft announced that it was buying Bethesda Softworks parent ZeniMax Media for $7.5B in cash. In our opinion, $7.5 billion is a steep price for a video game publisher, but it’s a drop in the bucket for $1.67 trillion Microsoft and its $136 billion war chest. With Microsoft’s checkbook open, we are taking a look at which company Microsoft might purchase next. The ideal takeover target for Microsoft is Microvision. In this article, we take a look at the dynamics at play and why MVIS belongs in Microsoft’s portfolio.
As you can see from the chart below, we aren’t the only ones speculating on a MVIS buyout from Microsoft. MVIS stock rallied 16% on the Bethesda news. However, we’ve been calling for a buyout of Microvision. We alerted our subscribers on August 27th when MVIS dipped to $1.25 that a buyout might be coming. This was a follow-up to our June article when MVIS was trading at just $1. Most are now sitting on gains of between 60% and 100%, but there are a lot more gains to be had if a buyout comes to fruition.
First up, here’s a little background info for those that are not familiar with Microvision stock. MicroVision is the creator of PicoP® scanning technology, ultra-miniature sensing, and projection solution based on the laser beam scanning methodology pioneered by the Company. MicroVision’s platform approach for this sensing and display solution means that its technology can be adapted to a wide array of applications and form factors.
MicroVision has a substantial portfolio of patents relating to laser beam scanning projection and sensing. MicroVision’s industry-leading technology is a result of its extensive research and development. The Company is based in Redmond, Washington, which is also the headquarters of Microsoft.
The acquisition includes “publishing offices and development studios spanning the globe with over 2,300 employees, including Bethesda Softworks, Bethesda Game Studios, id Software, ZeniMax Online Studios, Arkane, MachineGames, Tango Gameworks, Alpha Dog, and Roundhouse Studios.”
Bethesda’s top game franchises include The Elder Scrolls, Fallout, DOOM, Quake, Wolfenstein, and Dishonored.
Microsoft will add Bethesda’s games to its Xbox Game Pass subscription service. Future Bethesda games will appear on Game Pass on launch day.
Why A MVIS Buyout Makes Sense For Microsoft
Here are just a few reasons why a buyout of MVIS by Microsoft makes sense.
- Google, Facebook, Amazon, Apple, Microsoft, and many, many other companies need to strengthen their Lidar/AR/VR capabilities. Here MVIS stock is a market leader.
- Microvision has over 450 issued patents, pending patents, and licensed patents worldwide.
- This patent portfolio is very, very valuable. No doubt one or more of the companies above are already infringing on Microvision’s patents already.
- On the earnings call, the company said “I would like to clarify that we are engaged in discussions with certain potentially interested parties who are at various stages of diligence. We do not plan to make public statements about any bids or potential transactions unless and until an appropriate agreement is reached. I can share that a focused group of Top Tier OEMs and technology companies are engaged in exploring and potentially pursuing strategic alternatives, which could include a sale or merger of the Company, acquisition of one or more product verticals, strategic investment, and acquisition or licensing of our intellectual property.”
- Craig-Hallum was hired back in April to explore all options including the sale of one or more of the company’s module product verticals and related technology or a potential sale of the Company.
- Dr. Mark B. Spitzer just joined the board of directors. He was part Google X as Director of Operations for Glass and later moved to the VR team at Google where he helped build expertise in VR hardware design.
- Microsoft is a long-standing customer for Augmented Reality modules from Microvision. For example, Microsoft HoloLens 2 uses projectors from Microvision. Many former Microvision employees now work for Microsoft.
- Microsoft might be interested in Microvision’s AR division for new versions of HoloLens and launching Surface Glasses as a natural evolution of HoloLens.
- Microsoft could thus have the chance, through the acquisition of Microvision, to become the market leader in the field of light and chic smart glasses and to create a “next thing”, like Apple’s iPhone.
- Microvision is the only manufacturer to offer a LiDAR system that offers a very high resolution of 15.5 million dots per second (optionally up to 20 million dots per second). In addition, it is both small and inexpensive (estimated at $50), making it an ideal accessory for the Xbox.
- Bethesda games are terrible. Just ask any gamer. If Microsoft will pay $7.5 billion for Bethesda, how much is MVIS worth?
The trends are too favorable for MVIS stock. All indications point to a buyout coming sooner rather than later. With Microsoft making a big push into the AR/VR space, MVIS stock is a natural fit. With over 450 patents and counting, the IP alone is worth a fortune, especially when you consider Microsoft’s deep pockets. Overall, the bull case remains strong for MVIS as the company would fit nicely into Microsoft’s portfolio.
As always, good luck to all (except the shorts)!
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Disclosure: We have no position in NASDAQ:MVIS or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.
Image by Efes Kitap from Pixabay