

It appears the mystery buyer of Salesforce was Microsoft, but talks have fizzled - coloneltcb
http://www.businessinsider.com/buyer-of-salesforce-was-microsoft-2015-5

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nl
Wow. Everyone seems to miss the point of what this is about.

MS wouldn't buy Salesforce (just) for the technology any more than Oracle
bought Sieble and PeopleSoft for their technology.

CRM vendors are bought for their customers. CRMs are so deeply integrated into
a company's business that the are basically guaranteed money into the future.

Exactly how _much_ money is the only question.

(MS already has a competent CRM offering and a good cloud story. All this talk
that they should spend their money to build a competitor misses the point!)

~~~
gcb0
didn't they bought yammer some time ago for much, much more than their client
list was worth?

~~~
nl
Yeah,but you need to look at the growth trajectory too. Yammer was exploding
in use, and people pay a premium for that.

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greggyb
>Salesforce's stock has been trading at all-time highs — partly because of
rumors about a take-over, but also because the company has had some really
good quarterly earnings and is growing fast.

>Now that it appears merger talks are over, shares of Salesforce are climbing
again.

Stock price climbed due to potential for a merger.

Stock price climbs again due to end of potential for a merger.

Does a merger have an effect on the stock price? Its presence and absence are
both (partial) causes for stock price growth.

I'm probably primed for this due to an article on a logic puzzle[0].

[0][https://news.ycombinator.com/item?id=9588845](https://news.ycombinator.com/item?id=9588845)

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jaredhansen
I have no idea whether the price offered was a good one, but the reason that
both the rumors of talks, then the dissolution of talks, could cause the stock
price to rise is pretty simple:

1) Rumors circulate of a pending acquisition. Obviously that acquisition will
have to happen at a premium to the current price or it won't happen, so that's
a signal that if you buy at today's price, you can sell in the acquisition and
make a profit. People start buying on that rumor, causing the price to rise.

2) Reports subsequently surface that a $55B offer, which would have been a
premium from the original price, was rejected and that $70B was sought. People
think "well maybe the real clearing price is something like $65B" \-- and
that's higher than today's price, so people buy at today's price in hope of
making a profit if/when that transaction eventually takes place. The price
therefore rises again.

Again, no idea what the price "should" be today, but it's not illogical that
the price could rise both on the rumor and on the end of the rumor (especially
when, as here, the explanation for the end was the (possibly self-serving)
"the price wasn't high enough!").

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greggyb
I get how both can cause an increase in stock price in practice.

Coming as I was immediately from the logic puzzle thread, I was primed to
think differently about the statements.

A very literal (and a bit naive) reading of the article leads one to conclude
that: merger -> increased price not merger -> increased price

This allows us to conclude that knowledge of (merger|not merger) gives us no
extra information about whether price should increase.

Again, I am interpreting strictly as a pair of logical statements.

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nl
You are missing a key variable.

Estimated future earnings -> price

~~~
greggyb
Not missing anything. Please see above; I am amused at the naive
interpretation of two excerpted sentences. I am not ignorant of matters
financial.

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kabdib
As a Microsoft stockholder, this makes me happy.

They should be bloody innovating and figuring out how to make better products,
not doing internal political infighting. $55B buys you a _lot_ of runway if
you want to dedicate it to making your own products.

Hell, for $55B you can buy all the developers and people at Salesforce who are
any good at all and wind up with a decent product team. Rent a hotel near the
Salesforce offices and offer generous bounties.

Cheaper. More effective than throwing money away.

~~~
hkmurakami
Replicating SF's product portfolio won't get you their customers or (perhaps
more importantly) their sales team and culture of sales.

~~~
kabdib
I think that's a fallacy. $55B can still get you a great product and a _lot_
of customers, and you can probably do a better job of product development. You
don't need SF's particular customers, or if you do, maybe you don't want them
with the products that SF has.

Why buy a legacy when you can do something better? I guarantee you that
whatever SF has can be done better and cheaper.

Why not get hungry sales people who are willing to take SF's customers away
from them?

I see these deals coming from people who are incapable of technology
development, who have been stalled in corporate culture and who have to
justify their existence by making big deals. They are terrified of doing
development because they don't know _how_ to -- but they know how to "do
deals" and so that's what you get out of them.

Microsoft's successes seem to come from buying technology (not all the time).
Historically they haven't been very good at buying customers or teams, or
doing strategic "Deals" (capital-D).

It's a waste of money. It makes me want to vomit.

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eschutte2
> Why buy a legacy when you can do something better? I guarantee you that
> whatever SF has can be done better and cheaper.

> Why not get hungry sales people who are willing to take SF's customers away
> from them?

Isn't that what Microsoft's been trying to do for a decade with Microsoft
Dynamics CRM?

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kirinan
I don't know: 55b is a huge number, not unfathomable of course but huge.
Salesforce is a great company and a no doubt innovative and disruptive one,
but they hold no talent that Microsoft doesn't have and they will hold very
few businesses that are not already Microsoft customers in some regard. You
might be able to argue that they have a lot of cloud expertise, but Microsoft
has already built some incredible cloud offerings in Office365, Outlook and
Onedrive that share a lot of the overlap with Salesforce. I have a hard time
believing that Microsoft would even want any part of that, it just seems like
a huge waste of cash for a very little upside. If they had mentioned Oracle,
it might be a little more feasible.

~~~
mattzito
The difference between Oracle and Microsoft is that Oracle _has_ offerings in
the majority of the places that Salesforce.com plays in. Oracle has a CRM, a
Marketing Cloud, Analytics, and so on.

Microsoft has a CRM, but not one with a significant market share. They also
have an analytics platform, but not one that is as clearly defined - there's
SQL Server, Azure Analytics, BI for 365. They have no marketing management, no
real helpdesk/support system, etc.

If anything I would say that there is much less overlap between MSFT and SFDC
vs. Oracle and SFDC.

Plus Ellison is an investor in Netsuite - not that it precludes a SFDC
acquisition, but it's yet another hurdle.

~~~
vinbreau
Very true. I work for SalesForce's only major competitor. We were acquired by
Oracle as social marketing is a space that they had almost no understanding of
but a strong desire to enter. Since our company was already researching social
analytics, sentiment analysis and direct social marketing tools, I'm sure it
was easier for them to acquire us than start R&D on their own tool suites. Not
to mention our already installed client base. Salesforce is a hot commodity in
our space. Were MS to acquire them they would have a foot in the social space
with almost no time investment and little onboarding expenses. I'm kind of
surprised this deal fell through.

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bdcravens
Given Salesforce's ownership of Heroku, I wonder what affect this would have
on the Rails community? (to be certainly folded into Azure)

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mpeg
I don't think a potential acquisition would mean much for Heroku's
independence, they continued business as usual after the SFDC acquisition, so
it'd make no sense for Microsoft to worry about rolling them into Azure (these
things take years in practice), at least in the short term.

~~~
bdcravens
Microsoft is definitely a lot friendlier to Linux and open source these days,
though I think a Microsoft-owned hosting platform atop Linux and AWS would be
.. strange. I suspect they might even divest it as part of the acquisition.

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outside1234
I think they'd like to have an open source offering like Heroku's workflow.
They'd certainly migrate it off of AWS though.

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brethlessmahony
I know people hate Ballmer, but who would you rather have at your side of the
negotiating table, humble Nadella or bulldog Ballmer?

~~~
randomfool
The Ballmer who wanted to buy Yahoo for $44.6B in 2008?
[http://news.microsoft.com/2008/02/01/microsoft-proposes-
acqu...](http://news.microsoft.com/2008/02/01/microsoft-proposes-acquisition-
of-yahoo-for-31-per-share/)

No thanks.

~~~
brethlessmahony
I agree. I mean irrespective of acquisition targets, who is the tougher
negotiator.

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brethlessmahony
What if this was a mutually agreed upon hoax meant to play the media?
Salesforce reminds people "Hey we're worth a lot and our growth prospects mean
we can turn down huge sums of money." Microsoft reminds people "Yeah we have
$95 billion in cash and can afford big acquisitions."

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BorisMelnik
Has anyone considered Google? It was odd, I recently was accepted into one of
their internal programs and noticed they used Salesforce as their CRM. I know
this is not nearly enough evidence but Google doesn't have a CRM and think it
might be an obvious choice.

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toyg
The question is whether Google _needs_ or _wants_ a CRM. They don't seem
particularly bothered about the enterprise space.

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hkmurakami
Their entire ads platform is in the "enterprise space".

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toyg
Yeah but it's a different sort of "enterprise space". They do a bit of "big
data", a little of infrastructure (much-neglected Apps, which are mostly
oriented to SMEs anyway) and ads.

They don't sell a reporting package (i.e. THE enterprise tool), payroll, ERP,
OLAP, consolidation tools... none of that. That's the real big-corp
"enterprise" stuff, and they don't seem particularly interested in entering
that space.

~~~
hkmurakami
So admittedly I was intentionally misinterpreting what you meant (Journalists
must have a term for this since they do it all the time).

I think we can both agree that "Enterprise" is too broad, vague, and context
dependent. Is there a good collective noun that represents the "enterprise
stuff" (mostly internal management tools but not exclusively so)? It'd be a
useful term to have.

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jasonLJ
I thought it was pretty obvious that it was Microsoft, I mean, I knew about
it.

