Buyout Bait Tech Stocks: Salesforce.com (CRM)
A few years ago, the idea of “cloud computing” seemed kind of fanciful — after all, what company would trust its valuable information outside its fortified IT walls?
Now, of course, we know that big business was more than willing to buy in, and one of the biggest winners has been Salesforce.com (CRM), which has cruised ahead by 800% in the past five years.
CRM has invested heavily in marketing and R&D to keep up growth, and the company has introduced a variety of innovations in mobile and social networking. Plus, Salesforce has been aggressive in acquisitions, including its 2013 buyout of ExactTarget — a top player in cloud-based marketing systems — for $2.6 billion.
In the latest quarter, CRM’s revenues hit $1.08 billion, up 36% on a YOY basis, marking the first time the company reached the $1 billion mark for a quarter.
Yes, now the cloud is a must-have and is making inroads into the businesses of old-line companies like Oracle (ORCL), SAP (SAP) and Microsoft. So, how would the old guard keep up? Well, it could by Salesforce.
The biggest hang-up here is CRM’s price tag, which is the heftiest of all four of these possibilities. Salesforce has a market cap of $38 billion (and counting).
But maybe someone will take a play out of Zuckerberg’s playbook and spare no expense.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.