JMP Says Another Buyer For Salesforce.com Could Be Google
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
|Feb 2017||Needham||Initiates Coverage On||Hold|
|Jan 2017||Pivotal Research||Downgrades||Buy||Hold|
|Dec 2016||Drexel Hamilton||Initiates Coverage On||Buy|
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