Microsoft Corporation (NASDAQ:MSFT) may have an ulterior motive for their rumored upcoming purchase of Minecraft-maker Mojang AB for $2 billion. According to investor and analyst Jim Cramer on CNBC today, the deal is likely a precursor to Microsoft Corporation (NASDAQ:MSFT) eventually spinning off their Xbox gaming division, with Cramer saying “I think Xbox gets spun-off.”

“I think Xbox is not core. I think Xbox is worth a great deal. You break it out, you’ve got the biggest gaming company in the world, who you know from all these different acquisitions that gaming is done by hundreds of millions of people. And so this gives you, ‘I want a share of Xbox, I do, I want a share of Xbox’,” Cramer said.

Microsoft Corporation (NASDAQ:MSFT)’s Xbox division has long been considered a non-core asset of the company, with minimal profits since the division’s flagship game console launched in 2001. Microsoft Corporation (NASDAQ:MSFT) investors like ValueAct have in the past clamored for the sale of the division, and even Microsoft Corporation (NASDAQ:MSFT) founder Bill Gates was quoted as saying he would support a spinoff of the gaming division, though this was clarified as being a show of support for new CEO Satya Nadella, rather than an indication that he thinks the division should be sold, necessarily.

While Microsoft Corporation (NASDAQ:MSFT) achieved a much greater level of success in the last console generation with the Xbox 360 than they did with their first console, that success has failed to carry over to the current generation. The Xbox One is being outsold greatly by Sony’s PlayStation 4, reportedly as high as a 2-to-1 rate globally, and 3-to-1 in some markets. Xbox One also endured a horrific debut in Japan last weekend, one of the world’s largest gaming markets, selling just 23,562 units in its first four days on sale there according to Time, a fraction of what their previous two consoles sold upon their debuts in the country.

The acquisition of Minecraft,  one of the most popular games in the world with sales of over 50 million copies on various platforms, would be the first multi-billion dollar one by Nadella since he took over as CEO back in February, and would make the Xbox division a far more appealing one.

http://www.insidermonkey.com/blog/microsoft-corporation-msfts-minecraft-purchase-a-precursor-to-xbox-spinoff-327733/#YPvzTaGC0UcsQCSI.99

tagging this.

Could someone explain how acquiring Mojang for MS means they are spinning off xbox division??? I just don't understand how the two relate. Wouldn't MS not want to acquire more console game division assets if they were spinning it off?

Teh plot thickens

To make the divison look more valuable and profitable, thus making it more attractive to investors. 

Mojang has alot of value, and minecraft brings in a ton of cash.  any spun off xbox would need strong secure cash flow to back further developement.   In order to buy exclusives,  they need to money to come from somewhere.  i guess they are hoping minecraft can do that so MS wont have to.

So...if the division is having trouble turning a profit would' spinning it off be a huge risk? I don't really know but this sounds like Sony spinning of their TV division. This may be do or die time for Xbox.

But as I said I don't really have an education in business to go off of.

Tagged

Ugly cold hard truth is that the Xbox division can never match the profitability of the rest of Microsoft. Period. That ALWAYS makes Xbox a candidate for MS to divest itself from it.

Time for Jim Cramer to retire.

because its hard to integrate xbox into other fields.