The Tableau Acquisition Is A Game Changer

Jun. 19, 2019 8:09 PM ETSalesforce, Inc. (CRM), DATA19 Comments
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  • Big data and business intelligence is a rapidly growing industry. On its own, Tableau is among the leading firms in this area and was well-positioned to succeed.
  • The acquisition was an all-stock deal, meaning this will have no hit on the cash flow and's ability to continually grow.
  •'s acquisition of Tableau is strategic in nature, the addition of the latter on Salesforce's products would create a product offering that is unmatched.

Introduction (NYSE:CRM) recently acquired Tableau (NYSE:DATA) in an all-stock deal valued at roughly $16 billion. Wall Street wasn’t too happy at the announcement of the deal, sending the stock down as much as 8% the day it was announced. Criticisms of the deal are that Salesforce overpaid for Tableau or that maybe Salesforce was stepping way outside its comfort zone. Given that it was an all-stock deal, the acquisition is expected to decrease fiscal 2020 non-GAAP EPS by 37 cents to 39 cents. In 2018, Salesforce earned $1.43 per share on $13.28 billion in revenue, making it clear that the stock is expensive from strictly a P/E ratio perspective.

So why am I so excited about this deal? Basically, the deal is strategic in nature and reminds me of the time Facebook (FB) acquired Instagram. At the time Facebook was heavily criticized for having overpaid. However, Facebook knew the strategic value of Instagram and how it complemented and enhanced its existing services. Now as a stand-alone company, Instagram is valued at $100 billion and returned 100 times its investments. I believe Salesforce’s acquisition of Tableau is poised to do the same.

Strategic Acquisition 101

A deal that is strategic in nature is designed to bring the acquirer capabilities it doesn’t yet have and that will allow it to intensify its own capabilities system. So what exactly is Tableau?

Tableau Software is a computer software company that produces a family of interactive data visualization products focused on business intelligence. Tableau is a self-service analytics platform that empowers people of any skill level to work with data to get rapid insights and make impactful data-driven decisions. Using Tableau you can quickly connect, visualize, and share data, create and publish dashboards and share them seamlessly from PC to iPad.

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Nine to 5 by day. Hobbyist stock trader by night. I got an MBA and a CFA ... so that should count for something. I only care about my own greedy interests and I love feeding trolls. Not your financial advisor. Information for entertainment purposes only. Diamond hands are forever.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in CRM over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Caveat emptor! (Buyer beware.) Please do your own proper due diligence on any stock directly or indirectly mentioned in this article. You probably should seek advice from a broker or financial adviser before making any investment decisions. I don't know you or your specific circumstances, therefore, your tolerance and suitability to take risk may differ. This article should be considered general information, and not relied on as a formal investment recommendation.

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