salesforce.com, inc. (NYSE:CRM) — This cloud computing solutions company, which is a leading provider of on-demand enterprise applications, has been rumored to be a takeover candidate for several months. However, the rumors took on heightened interest last week after Bloomberg broke a story that salesforce hired financial advisors for assistance in dealing with acquisition offers.
Zacks pointed out that if a takeover did occur, it would be the largest ever of a software company. The Bloomberg report did not name a possible buyer, but an acquisition of this size could only be made by a few technology giants.
Credit Suisse Group AG (ADR) (NYSE:CS) said that those with the means to handle such a large deal include Oracle Corporation (NYSE:ORCL), SAP SE (ADR) (NYSE:SAP), Microsoft Corporation (NASDAQ:MSFT), Google Inc (NASDAQ:GOOGL) and International Business Machines Corp. (NYSE:IBM). Its analysts suggested that the most logical candidate is IBM, which has a huge war chest. They estimated the company’s value at between roughly $82 and $88 per share.
On April 29, the day of the Bloomberg story, this highly volatile stock broke from a trading band with support at $66 and resistance — now support — at $70. Volume spiked to the highest level in over a year, at almost 28 million shares. This exceeded the previous high-volume day of Feb. 26, when CRM stock traded just over 20 million shares.
Even though the breakout followed the Bloomberg report, it is doubtful that public volume could have accounted for two such high-volume days, and it may have resulted from a possible suitor.
Nevertheless, this should be considered a very high-risk trade and is only suitable for those who have the means to speculate. Buy CRM stock under $70 with a one-month trading target of $80 for a 14% return. A stop-loss order should be placed at $65.
