Salesforce Stock Jumps; Google Acquisition Rumors Playing A Part

 Salesforce's (CRM) stock price jumped over 10% Wednesday to an all time high (the Nasdaq rose a little over 1%). The company’s market cap rose $743 million, to $8.06 billion. Why the big jump? There is no public information or news emerging to support the increase.

Our sources in private equity say it was fueled by whispers of Google acquisition talks. And short sellers (Salesforce has a lot of them) may have moved to cover their positions, magnifying the rumor effect. 2.92 million shares traded today, about 55% more than average.

A week ago Google and Salesforce announced broad integration of Google Apps (Docs, Calendar, Gmail, and Gtalk) and Salesforce’s online enterprise apps, which, our sources say, may just be a test of a more serious relationship.

If Google were to acquire Salesforce (and to be clear, we’re hearing nothing other than the private equity based rumors) it would likely be a cash deal to avoid earnings dilution. Salesforce is trading at an impressive 319 times forward earnings, compared to Google’s 32.66. Cisco and Oracle are said to be interested as well, but not Microsoft.

Here’s the interesting thing about the rumor - everything we hear from Silicon Valley sources says it isn’t happening. We’ve heard Google’s corporate development team is actually knee deep in another, much smaller transaction. And why put so much time into ironing out the elaborate business development deal announced last week if it’s only a prelude to an acquisition?

Salesforce’s Q1 financials will be announced on May 6.

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Comments

[raceluver]

you should not write about rumors huh? Make a disclosure.

[LouieJunior]

I thought these shares were way over-priced at $50!
I am shorting it if it reaches $70. What a nice gift.

[AndrewMelcher]

As I said in my SeekingAlpha article in January 2007:

"It's hard to imagine a way that Microsoft will harm Google at this point in time, but the best defense is to make free [ASP] network software that renders node software financially untenable as an industry. Some journalists ridicule Google for rolling out embryonic ASP applications in Beta form. But the ridicule will probably not last long. Each of these ASP programs will adapt in cycles measured in weeks, not years as with desktop applications forced to run on Windows 95,98, ME, XP and now Vista, and forced also to be compatible with 1000 other applications. Google’s policy of hatching embryonic live young that will be constantly upgraded by small development team is actually a very wise way to do things in a network centric environment.

Soon, I suspect that the oxygen will be removed from Microsoft’s environment by Google’s higher order technology – a technology that will give users access to any major type of software application (faster adapting ASP software) for only the price of the information users enter and the ads they view."

seekingalpha.com/artic...

[myditka]

Where are you getting your information about Salesforce's Q1 financials announcement? Where does it say May6? I spoke to IR and they mentioned the week of May 19.

[Why the hate]

Is there some reason these Internet industry articles NEVER have a disclosure about ownership?