The acquisition of Slack is “a stroke of poker” to compete with Microsoft in the cloud, (Photo: Unsplash)
What to do with Salesforce, Zoom and BMO titles? Here are some recommendations from analysts that may move prices soon. Note: the author may have a totally different opinion from that expressed.
Salesforce.com (CRM, US $ 241.35): an alliance against Microsoft
The acquisition of Slack (Work, US $ 83.84) is “a stroke of the game” to compete with Microsoft (MSFT, US $ 216.21) in the cloud, summarizes Daniel Ives of Wedbush.
The specialist in IT services also unveiled “solid results”, but Daniel Ives devoted the vast majority of his note to the official announcement of the transaction, already stale in the media.
The San Francisco-based company is offering US $ 27.7 billion (US $ billion) in stock and cash to get its hands on the courier specialist. The transaction is expected to be completed in the second quarter of fiscal 2022, that is, between May and July 2021. “We do not believe that another potential buyer will come forward and we believe the transaction will proceed. without a hitch, ”comments the analyst.
The main reason for the transaction is to better compete with Microsoft and its Azure cloud division and its Teams platform. “Despite stiff competition from Microsoft, Slack has clearly managed to grow in the messaging market,” said Daniel Ives. The alliance is natural for Salesforce who wants to improve its messaging service and not be left behind in the cloud. “
Courier services are here to stay, the analyst adds. Even when the population is widely vaccinated, these applications will continue to be used daily in many workplaces. With Slack, Salesforce will be able to promote other cloud products and reach out to businesses that were previously out of reach.
Daniel Ives acknowledges that some investors are frustrated over the announcement while CEO Marc Benioff said just three months ago that he was not planning any major acquisitions. The purchase of Slack is his biggest acquisition to date. The title therefore risks being “on the penalty bench” while analysts “understand” the strategy that motivates this acquisition.
The analyst barely commented on the results for the third quarter of 2021 (ended October 31). The company reported earnings per share of US $ 1.74, much higher than analyst consensus at US $ 0.75. He points out that US $ 0.86 of this profit is attributable to his investment portfolio.
Wedbush renews its “outperform” recommendation and its target of US $ 300.
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