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.

2008 Apr 24 08:26 AM

[Louie Junior:]

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

2008 Apr 24 09:08 AM

[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.

2008 Apr 24 10:26 AM

[Russia is v...:]

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

2008 Apr 25 08:04 AM