April 30, 2015
Super heavyweights Hewlett-Packard (HPQ), IBM (IBM), Microsoft (MSFT), Oracle (ORCL) and SAP (SAP) are said to be likely suitors possibly vying to take over Salesforce.com (CRM), after Bloomberg reported the CRM provider is engaged with financial advisers to help field offers.
One unidentified potential buyer already is said to have approached Salesforce, prompting it to consult with the financial advisors, Bloomberg reported. At this point, it’s unclear if a deal is on the table or if one will get done.
Still, the news prompted a feeding frenzy on Salesforce’s stock that forced a temporary suspension of trading on Wednesday, with shares ultimately jumping 11.6 percent to close at $74.65, giving the company a market capitalization of about $44 billion at day’s end.
Salesforce posted sales of $4.07 billion for the full year 2014 and expects revenue to reach $5.3 billion in fiscal 2015.
While HP, IBM, Microsoft, Oracle and SAP all command the financial strength and wherewithal to acquire Salesforce, analysts believe Oracle might pursue the CRM leader the hardest, considering it was late to the cloud and could make the most of the acquisition. Of the five vendors, Oracle’s cloud position is the least mature.
“We would view Oracle as the most likely acquirer that makes sense on paper and strategically speaking,” Daniel Ives, FBR Capital Markets analyst, told MarketWatch in an email. “Oracle was late to the game on the cloud and we believe would have to make a game-changing acquisition. Salesforce would fit like a glove in our opinion.”
There’s little question that Oracle is starting to beat its chest with its own cloud efforts. Oracle co-chief executive Mark Hurd said last week that at least 95 percent of Oracle’s products will be available in the cloud by mid-October when the database vendor holds its annual OpenWorld conference. Right now, some 65 percent of its products, services and applications can be had in the cloud, he said.
And, on the company’s recent FQ3 earnings call, Larry Ellison, Oracle executive chairman and chief technology officer (CTO), made it clear the vendor had Salesforce in its sights.
“On our last quarterly conference call, I predicted that in our fiscal year 2016 Oracle would likely sell more SaaS and PaaS new business than Salesforce.com,” Ellison said. “I was way too cautious and conservative,” he said.
“Our cloud business is growing a lot faster than even I expected,” said Ellison. “Our cloud bookings are now growing at over 100% per year, so I’d like to revise my prediction. I now believe that Oracle will sell more new SaaS and PaaS business than Salesforce.com in this current calendar year, 2015,” he said.
Salesforce founder and chief executive Marc Benioff is a former Oracle executive and Ellison once held a seat on Salesforce’s board. The two have had an on-again, off-again rivalry that of late has gained steam with Ellison publicly identifying Salesforce as Oracle’s biggest cloud competitor.
As expected, spokespeople for Salesforce, Oracle and Microsoft declined to comment in reports.
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