Microsoft now has no plans to pursue Salesforce say sources

Written by on May 8, 2015 in News with 0 Comments
REUTERS/Jim Young

REUTERS/Jim Young

(Reuters) – Microsoft Corp currently is not weighing an offer for Salesforce.com Inc, two people familiar with the matter said on Thursday, dampening speculation that Microsoft could be drawn into bidding for the cloud software company.

Bloomberg News, citing people with knowledge of the matter, reported earlier this week that Microsoft was evaluating a bid for Salesforce after the latter was approached by another unnamed would-be buyer.

Microsoft considers Salesforce’s current market valuation expensive, one of the people said. It is possible that Microsoft could review a bid for Salesforce in the long term, the other person said.

The sources asked not to be identified because the deliberations are confidential.

Microsoft and Salesforce both declined to comment.

San Francisco-based Salesforce is No. 1 in the $23 billion-a-year customer relationship management (CRM) market, according to tech research firm Gartner. It helps corporations organise and track sales calls and leads.

Salesforce’s services are entirely provided over the cloud, with no software directly installed on PCs. Oracle and Microsoft, which were relatively late to the cloud model, have much smaller online CRM revenues.

As a result, Microsoft and several other big software companies are seeking to beef up their presence in cloud computing.

Yet any deal for Salesforce, which has a market capitalisation of $49 billion, would be pricey. Salesforce’s shares, which have risen 48 percent in the last 12 months, trade at 106.8 times the company’s forward earnings, well above Microsoft’s multiple of 19.1, according to Thomson Reuters data.

Last month, Oracle Chief Executive Safra Catz said her company could benefit if Microsoft or another rival bought Salesforce.com.

“It would cause a lot of disruption in that market and so I would view that as something that would be helpful to us, especially in the short or medium term, dependent on who it was,” Catz said. She declined to comment on whether Oracle had made an approach to buy Salesforce.
Another potential buyer for Salesforce has ruled itself out. SAP SE Chief Executive Bill McDermott said earlier this week his company has “zero interest” in its software rival.
“We have never bought something that was impaired and in decline,” he said, saying that Salesforce’s cloud computing software was becoming commoditised.

(Reporting by Nadia Damouni in New York; Editing by Leslie Adler)

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