Why Microsoft’s $2T+ market cap makes its $78B Activision buy a cheap bet

techcrunch.com:

Even though consumer gaming constitutes a small fraction of its overall business, Microsoft’s announcement yesterday of its all-cash $69 billion deal to buy Activision Blizzard proves that the technology corporation takes the sector plenty seriously.

It is easy to think that Microsoft should have invested the money into other, perhaps more lucrative businesses in its portfolio. But with a market cap just over $2 trillion (a number so large it’s hard to wrap your head around), Microsoft has vast resources to invest in the most logical parts of its business.

Even if this $70 billion bet doesn’t pay out, Microsoft will come out on the other side fairly unscathed. That kind of financial power gives a company myriad options, even if it involves making one of the largest acquisitions in tech history.

Let’s not forget that this deal comes on the heels of Microsoft’s acquisition of speech-to-text company Nuance last spring for $20 billion. That deal that is stuck in regulatory limbo in the U.K., which begs the question: Given it size and scope, could regulators end up taking a close look at the Activision Blizzard deal, what could be perceived as a gaming market land grab?

With that in mind, we’re examining this deal’s financial viability to see whether Microsoft might have been better off putting those resources into the enterprise/business side of the house, or if its resources are simply so vast that the company doesn’t have to consider the sort of tradeoffs most companies must make when it comes to an M&A of this magnitude.

Although Microsoft is reporting earnings next week, we can still see the breakdown of how the company makes the majority of its money from its most recent report, disclosed October 26, 2021. In that earnings