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JMP Says Another Buyer For Salesforce.com Could Be Google

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JMP Says Another Buyer For Salesforce.com Could Be Google
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In a report published Wednesday, JMP Securities maintained a Market Outperform rating on salesforce.com inc (NYSE: CRM), with a price target of $75.

There is a news report about Microsoft Corporation (NASDAQ: MSFT) evaluating a bid for salesforce.com. The news report added that the cloud software company had also been approached by another prospective buyer. The analysts believe that the “other would-be buyer” is most likely Google Inc (NASDAQ: GOOG) (rated Market Outperform, PT $625).

Referring to various prospective bidders, the report said that while Microsoft is considering a purchase, Oracle Corporation (NYSE: ORCL) is "less likely" and SAP SE (NYSE: SAP) may not be considering it.

The report outlined why Google could be bidding for salesforce.com:

  • The company had $65B in cash and marketable securities as of March 31, 2015.
  • The acquisition would help Google become more relevant in the enterprise and would offer significant synergies in the SMB market.
  • Google already has a strong track record of integrating acquisitions.
  • Significant opportunity to integrate Google’s core search business (which has displayed slowing growth) with sales and marketing automation solutions from salesforce.com.
  • salesforce.com’s Platform-as-a-Service business would help Google compete against Amazon.com Inc (NASDAQ: AMZN) and Amazon Web Services. Amazon appears to be on a competitive “collision course” with Google, in our view.
  • Both Google and salesforce.com find a place in the Fortune’s 2015 edition of “100 Best Companies to Work For,” while Oracle, Microsoft and SAP are not ranked. So a possible deal between Google and salesforce.com would mean a better culture fit.
  • Google’s recently hired CFO Ruth Porat was with Morgan Stanley since 1987 and Morgan Stanley took salesforce.com public in 2004.

The report also outlined why Google would not buy salesforce.com:

  • As of March 31, 2015, roughly $37B of Google’s cash was held by foreign subsidiaries.
  • This deal would represent Google’s largest acquisition by far.
  • Google is primarily a business-to-consumer company, while salesforce.com is primarily a business-to-business company.
  • Google may find it difficult to consider the largest acquisition in its history before its new CFO settles in.

Latest Ratings for CRM

DateFirmActionFromTo
Nov 2016OTR GlobalUpgradesMixedPositive
Oct 2016RosenblattInitiates Coverage OnBuy
Oct 2016DA DavidsonMaintainsNeutral

View More Analyst Ratings for CRM
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Posted-In: JMP Securities VetrAnalyst Color Reiteration Analyst Ratings Best of Benzinga

 

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