| Stock | Price | 52 Week Range | Marketcap | EPS | Dividend Yield | Chart (24H) | Sector | Employees | Last Updated |
|---|---|---|---|---|---|---|---|---|---|
| $242.55 | 225.94B | 6.21 | 2.77% | Technology | 270,300 | 12 hours ago | |||
| $246.45 | 235.61B | 6.38 | 0.68% | Technology | 76,453 | 12 hours ago |
Investors, buckle up! In a landscape where cloud computing is reshaping industries and creating unprecedented opportunities, two giants—IBM and Salesforce—are making audacious moves to dominate the cloud. We’re talking about strategic acquisitions worth a staggering $4.5 billion, aiming to transform the cloud infrastructure and marketing spheres. Here’s why these moves by IBM and Salesforce should be on your radar.
Market Context: A Slight Dip Amidst Growth Prospects
The markets faced a mild dip recently, with private employers adding 135,000 jobs in May, falling short of expectations. This slight downturn translated into a 0.21% decline for the S&P 500 and a 0.18% dip for the Dow Jones Industrial Average. While such short-term fluctuations often sow doubt, the real action is brewing in the cloud computing arena. For those attuned to market-transforming strategies, the latest acquisitions by IBM and Salesforce depict a fascinating tale of high returns and potential market leadership.
IBM: Banking on Cloud Infrastructure with SoftLayer
Editor's Note: Analysis and insight for this article were originally sourced from our friends at The Motley Fool
IBM (IBM): Betting $2 Billion on Cloud Future with SoftLayer
IBM (International Business Machines Corporation) has made a monumental move by acquiring SoftLayer for $2 billion. This acquisition is a strategic leap into the infrastructure-as-a-service (IaaS) market, leveraging SoftLayer’s robust platform and infrastructure capabilities that are essential for cloud applications.
Although SoftLayer is a privately held company with an estimated annual sales of $400 million, its integration into IBM‘s portfolio is not just about expanding services and scalability—it’s about positioning IBM as a formidable player in the cloud infrastructure landscape.
IBM (IBM): Scaling New Heights with Cloud Ambitions
IBM’s targeted goal of deriving $7 billion in annual revenue from cloud services by 2015—against its 2012 revenue of $102 billion—emphasizes its pivot towards high-margin, future-proofing strategies. Investors, take note: IBM isn’t merely dabbling in the cloud; it’s embracing it with ambitious revenue goals that signal significant growth potential.
IBM has a stellar track record of generating shareholder value and economic returns. Priced at 12.1 times the next 12 months’ earnings-per-share estimate, IBM offers a grounded investment opportunity compared to the higher valuation of Salesforce. This stability, coupled with strategic innovation, positions IBM as a rock-solid bet for cautious investors seeking dependable returns.
| Acquisition Target | Acquisition Price | Trailing-12-Month Sales | Price/Sales |
|---|---|---|---|
| ExactTarget (acquirer: Salesforce) | $2.5 billion | $317 million | 7.9 |
| SoftLayer (acquirer: IBM) | $2 billion | $400 million* | 5 |
| *Estimate from the most recent full year. Source: S&P Capital IQ; Financial Times. | |||
IBM (IBM): Analysts Predict Steady 4.34% Gains – Is It Worth Your Stake?
| Analyst Rating | Average Price Target | Current Price | Potential Gain | Number of Ratings |
|---|---|---|---|---|
| Hold | $183.54 | $172.60 | 4.34% | 23 |
Salesforce: Aggressive Play in Marketing SaaS via ExactTarget
Salesforce (CRM): Radical Play for Marketing SaaS Power
Salesforce.com (CRM) doubles down on its core strength in Software as a Service (SaaS) and marketing automation by acquiring ExactTarget for $2.5 billion. ExactTarget, with its sales reaching $317 million, is a significant player in global marketing SaaS, despite not turning a profit since 2008 when it earned $3.6 million on $72.3 million in revenue.
Salesforce‘s offer of $33.75 per share—a 53% premium to ExactTarget’s closing price—underscores an aggressive growth strategy. This premium reflects Salesforce’s readiness to pay top dollar for market dominance and enhanced capabilities in the ever-competitive SaaS landscape.
Salesforce (CRM): Expansion at High Valuation – Strategy or Gamble?
Salesforce’s acquisition amplifies its growth trajectory, albeit at a high valuation of 76 times the next 12 months’ earnings. This hefty price tag might deter risk-averse investors but remains enticing for those seeking exponential growth potential. Salesforce’s focus on top-line growth, while risky, aligns with its reputation for innovation and market disruption.
Investors should consider that despite Salesforce’s aggressive expansions raising questions about economic returns and capital management, the potential rewards could be colossal. With an aim to integrate comprehensive marketing solutions through ExactTarget and strengthen its ecosystem, Salesforce establishes a compelling, albeit high-stakes, investment prospect for growth-oriented risk-takers.
Salesforce (CRM): Analysts Eye Big Gains for Bold Investors – What You Should Know
| Metric | Value |
|---|---|
| Consensus Rating | Moderate Buy |
| Average Price Target | $295.03 |
| Current Price | $262.71 |
| Potential Gain | 12.30% |
| Number of Ratings | 33 |
IBM vs. Salesforce: Investing Merits in the Cloud Race
1. IBM’s Strategic Shift to Cloud Infrastructure
IBM‘s acquisition of SoftLayer is a calculated step to harness the robust demand for scalable cloud solutions. This move leverages IBM’s established brand and IT services portfolio, with an eye on ambitious revenue targets from cloud services. Investors seeking stability and long-term value should find IBM’s strategic alignment attractive—it blends reliability with forward-looking innovation, setting the stage for consistent returns.
2. Salesforce’s Aggressive Entry through ExactTarget
Salesforce’s bet on ExactTarget fortifies its position in cloud computing and digital marketing. Despite the high valuation, the deal exemplifies Salesforce’s relentless pursuit of growth. For investors willing to embrace risk, Salesforce’s strategy promises significant upside potential. It captures the essence of aggressive expansion and market capture that define high-growth tech investments.
In essence, IBM and Salesforce are carving out substantial portions of the cloud computing market through these strategic acquisitions. Investors must weigh the balance between IBM’s robust, risk-mitigated approach and Salesforce’s aggressive, high-reward strategy. This dynamic is pivotal in deciding which of these cloud titans suits your investment style and growth aspirations.
Keep these insights at the forefront as you navigate the thrilling, ever-evolving realm of cloud computing investments. Remember, intelligence will out, and you have the acumen to capitalize on these transformative market moves. Stay smart, stay proactive, and watch these giants shape the future of the cloud.