Report: Microsoft Considering Salesforce Acquisition

An anonymous reader writes: Bloomberg reports that Microsoft is considering making a bid for CRM and cloud software company Salesforce, after hearing that Salesforce was entertaining an offer from another company. No talks are underway, but Salesforce has started working with investment banks to figure out how it wants to respond to such offers. Salesforce has a market value of about $50 billion, so any sort of acquisition would be a huge business deal.

Comments

$50 billion is not Huge, anymore

[turkeydance]

Austin Powers quote here.

Re:$50 billion is not Huge, anymore

[rsilvergun]

That's mostly because we've cut taxes on corps so much that they've got more cash than they know what to do with. I miss the 90% tax bracket. It kept corporate power in check and made them think about where they were investing their money. Now they can just casually toss $50 billion here and there and it's no skin off anyone's back.

Re:$50 billion is not Huge, anymore

[fustakrakich]

This company is not worth that much. This is some derivatives market magic accounting.

Re:$50 billion is not Huge, anymore

[Anonymous Coward]

oh the 90% tax bracket. You do know that's a bit of a myth, right?. It's technically true in that there was a tax bracket at 90%, but much like today, your tax bracket and your effective tax rate can be quite different. Do yourself a favor and lookup effective tax rates when the 90% tax bracket existed. I'll give you a hint, it was nowhere near 90%.

Re:$50 billion is not Huge, anymore

[Anonymous Coward]

Wait until Gold-in-Sacks gets involved in the merger. They'll pull some strings and pump up the stock value by another $10B, pocket the difference, and leave any regular investors with lighter wallets once all is done.

Re:$50 billion is not Huge, anymore

[ShanghaiBill]

That's mostly because we've cut taxes on corps so much that they've got more cash than they know what to do with.

America has one of the highest corporate tax rate in the world. That is the main reason that corporations have been leaving.

I miss the 90% tax bracket. It kept corporate power in check

The 90% tax bracket was an personal rate, that did not apply to corporations. The corporate rate has never been much above 50%, and even that was generally in wartime.

Corporate tax rate by year

Re:$50 billion is not Huge, anymore

[rtb61]

Paying taxes is about paying for the revenue opportunities those countries create. Don't want to pay the taxes, 'THEN FUCK OFF', you are not entitled to the revenue opportunities those countries create. Want to generate revenue in the 'HIGH VALUE' markets, then pay taxes in those markets where the revenue is generated and do not steal infrastructure, a customer base with money or the social services of that customer base. Countries need to start killing of companies that steal access to markets without paying, corporate deaths sentences with asset seizure. That corporate tax greed is depriving citizens of social services that ensure health and well being. Corporate greed is killing a percentage of the population every year, it is time to hold them accountable for those deaths, when they cheat on taxes that pay for those social services.

Want out, fine, 'FUCK OFF' but don't expect access to that market any more. Sell your shit to third world sweat shop workers, good luck with that.

Re:$50 billion is not Huge, anymore

[Anonymous Coward]

No, more like they buy it with leveraged debt, sell off the pieces put it back on the market as a debt laden husk.

Re:$50 billion is not Huge, anymore

[s.petry]

No, it is not a myth at all. Tax forms are public information and you can review them from the very first tax form. Up until Nixon it was not uncommon for people to pay 90% tax. Average wages may have been around 20K/yr at the time, and if you made a million a year you would still have 5 times the average salary. There were some fluctuations, and certain investments could be taken out of wages.. but not that many especially early in our income tax history.

Do yourself a favor, and actually do the work you claim other people failed to do before dishing out false information.

Re:$50 billion is not Huge, anymore

[jbolden]

The 90% bracket was on individuals. The corporate tax rate was never that high.

Most likely what you are concerned about is that capital gains aren't taxed very much so it pays for corporations to hold income and not pass it on as dividends. Things like: taxing assets mark to market (i.e. you pay on what the asset is worth each year), lower unearned income taxes along with higher capital gains taxes would get the effect you are looking for.

Re: $50 billion is not Huge, anymore

[rsilvergun]

That's just it, they didn't pay that. They paid the same as you and me on their first six figures. The higher bracketed percentages only applied to the portion after that. My numbers might be a little off but that's more or less how it worked

Re: $50 billion is not Huge, anymore

[Anonymous Coward]

We've had a graduated income tax since the early 1900s. 90% bracket was part of it. In fact, there were 95% brackets as well. Calling it a myth shows your own stupidity; nobody claimed that people paid 90% of their total income, just like I'm in the 25% tax bracket and I don't pay 25% of my total income in income tax, just 25% of what's above the threshold, with the less taxed at the lower rates.

Re: $50 billion is not Huge, anymore

[s.petry]

No, you failed to do the same work I told the AC to do! It depends on which time frame you are talking about whether or not there was a ceiling on paying 90%. Are you talking about 1918, or 1950? There were numerous changes in the tax code during that time, and some of those changes were reverted.

I would agree that no rich guy ever paid 90% tax, but it was not even close to your claim of it being the same as today. The people with the most wealth have paid less in taxes than anyone else since Reagan. Up until that fairy tale of "trickle down economics" there were huge fights regarding the tax code and the wealthy were paying much more than today.. much more.

From what I know of SalesForce, it's a perfect fit

[Frosty Piss]

I really have to say, it's right up Microsoft's alley. From what I know of SalesForce, it's a perfect fit.

Re:From what I know of SalesForce, it's a perfect

[Anonymous Coward]

Except for the part where Microsoft already has their own CRM, Dynamics.

Re:From what I know of SalesForce, it's a perfect

[Anonymous Coward]

Which isn't nearly bad enough for it to be something that the current ruler of Microsoft, John Thompson, to be proud of. He really loves software that is truly bad. He came to rule Microsoft from Symantec.

Bigger than facebook

[Anonymous Coward]

If microsoft buys sales force, it's guaranteed to become bigger than facebook!

Oracle is a better fit

[erp_consultant]

Oracle has been trying to get its foot in the cloud, so to speak, for a while now. Their success has been mixed, to be charitable. Oracle doesn't need the CRM software that Salesforce has since they already have Siebel and PeopleSoft and JD Edwards CRM offerings. What they do need is a proven cloud platform and that's where Salesforce comes in.

Salesforce already struck a deal to use the Oracle database as its back end. Salesforce also comes with a development platform (they call it Force) that allows you to extend and enhance what they deliver. You can even create your own bolt on applications. This fits in perfectly with their on premise offerings (PeopleSoft, JD Edwards, etc.) that allow you to do exactly the same thing.

Oracle could build out HR and Financials components, leveraging the Salesforce cloud platform, giving them a true Enterprise level offering that nobody else has on a cloud platform.

But what I really think the driving factor here is the destruction of Workday. Workday was founded by Dave Duffield, the former CEO of PeopleSoft. Duffield founded the company and lost out in a bitter hostile takeover by Oracle. Workday, although still very small and not yet profitable, has been nibbling at Oracles heels. Ellison sees the writing on the wall. If he waits much longer Salesforce will be too big for them to buy. This gives him the opportunity to buy one rival and crush another all in one fell swoop. Classic Ellison move.

Re:Oracle is a better fit

[Anonymous Coward]

Oracle already has a cloud sales product, and has purchased a number of cloud applications in other aspects of the marketing->sales->HR stream. it already has offerings in the HR and payroll space, now part of their larger cloud-marketing package. Purchasing salesforce would put them too deep into the FTC's eyes from a monopoly standpoint, mostly because of the marketing and HR products that salesforce itself has purchased over the last few years.

Purchasing to kill Workday would be a bit short-sighted, because the FTC impacts on all of the other suites would be too much to not cost more in legal fees and lawyers than it would gain, particularly after the other overlapping technologies were reduced/eliminated.

disclaimer: I work for Oracle, acquired when they purchased Eloqua in 2013. This post is kept anonymous intentionally.

Re:Oracle is a better fit

[Anonymous Coward]

One think we've learned is that

1. It doesn't bother Larry to acquire multiple premium offerings in the same space

2. It doesn't bother Larry to buy companies started by ex-Oracle salespeople who left just to stick it to him

The most likely acquirer is Oracle. Who else, IBM? They're all about financial engineering.

Re:Oracle is a better fit

[Hognoxious]

Oracle could build out HR and Financials components, leveraging the Salesforce cloud platform, giving them a true Enterprise level offering that nobody else has on a cloud platform.

This little upstart begs to differ http://hcp.sap.com/index.html

Re:Oracle is a better fit

[erp_consultant]

I haven't used SAP software personally but it has a reputation for being extremely complex and difficult to customize. SAP R/4 (I believe that is the newest version) has had a very slow adoption rate. Partly because customers spent so much money (in some cases 10's of millions of dollars) getting R/3 to work and are terrified to touch anything.

R/4 uses a proprietary database (HANA) rather than Oracle or DB/2 or one of the open source databases.

It might sound like I'm knocking SAP but I'm not. They face the same challenges that Oracle does. Big, cumbersome, complex. Lengthy and expensive upgrades. High maintenance fees.

Personally I'm not really sold on cloud computing. It doesn't have the flexibility that some companies need. Workday, for example, simply cannot be customized in any way. You can configure it in many different ways but you cannot add your own code to make it do something unique. In my experience, everyone customizes their software. Some studies have shown that the cloud model can actually cost more money in the long run.

But Oracle and SAP see a need to have cloud offerings for their customers that want it. Salesforce is going to be a very attractive prize for someone.

Re:Oracle is a better fit

[jsepeta]

Salesforce was built on top of Oracle.

Re:From what I know of SalesForce, it's a perfect

[Anonymous Coward]

Which is already made up of different acquistions, which haven't been merged together:

• Microsoft Dynamics AX (formerly Axapta) - multi-language, multi-currency enterprise resource planning (ERP) business software with global business management features for financial, human resources, and operations management as well as additional industry capabilities for retailers, professional service industries, financial service businesses, manufacturers, and public-sector organizations
• Microsoft Dynamics GP (formerly Great Plains Software) - ERP software for small and midsize businesses: helps manage financials, supply chain, and employees
• Microsoft Dynamics NAV (formerly Navision) - business management solution that helps small and mid-sized businesses manage their financials, supply chain, and people. It features multiple languages and multiple currencies.
• Microsoft Dynamics SL (formerly Solomon IV) - designed for project-driven organizations in North America. Business management software that supports future business growth.
• Microsoft Dynamics C5 (formerly Concorde C5) can assist with finance, manufacturing, supply chains, analytics and electronic commerce for small and medium-sized enterprises. The latest version is Microsoft Dynamics C5 2010.

(source Wikipedia)

Coming soon, Microsoft Dynamics SF!

The hipsters aren't going to be happy

[Anonymous Coward]

The hipsters working for salesforce certainly aren't going to be happy about getting acquired by M$

Re:From what I know of SalesForce, it's a perfect

[Anonymous Coward]

For a while, Salesforce seemed to be heading toward adopting PostgreSQL (e.g. they hired Tom Lane). Would have been great to see some open source goodness in the CRM space. But alas, it may not come to pass. Sad.

Re:From what I know of SalesForce, it's a perfect

[garyisabusyguy]

Just wait until Oracle jumps in the mix and starts a bidding war, because... well just because

Re:From what I know of SalesForce, it's a perfect

[sycodon]

CRM Dynamics suck donkey balls..seriously.

Shitty Outlook integration, the security is a nightmare. It can't even handle multiple domains. Our company had them working our installation for 3 months straight trying to get it to work.

Stay away from it.

You're right it's a myth

[rsilvergun]

it was 90% after the first $2 million, and that was in 1960. Adjusted for inflation that's something like $14 million today.

It was never really a tax per se. It was a check on out of control wealth concentration and the scary, scary power that comes with it. Plus it had the added bonus of encouraging real investment because hey, it was use it or lose it when it came to money. Now the rich can sit on a Scrooge McDuck style cash horde. But unlike the cartoon there are real consequences to that. Our economy grinds to a halt because all our capital is tied up in excesses like private jets & Mergers and acquisitions. No real value is added.

I saw the best quote ever in a news story a few weeks ago (I'm paraphrasing here): Finance is no longer a tool for getting money into productive businesses but for getting it out.

Re:You're right it's a myth

[Anonymous Coward]

Maybe I don't know enough, but I feel 90% is excessive even if it's only on corporations. But maybe if we have a tax system on businesses which step up. So the 90% tax is only on the EXCESS of $14 million on taxable profits.

I want true universal health care.
I want either a negative income tax or a universal basic income. (For UBI, I'm thinking $500/month for adults, but a lot more complex than just that.)
I'd like to see federal student loans capped at inflation by CPI, so what we borrow is what we repay.

Re:You're right it's a myth

[Anonymous Coward]

No point in trying to education this communist moron.

Re:You're right it's a myth

[Anonymous Coward]

Have you not ever paid taxes before?

Yes, the 90% would apply to income in the top bracket. Anything under $14M would be taxed at a lower rate; that's how tax brackets work. I'm glad that you understand that it's a good idea but not only have your revolutionary ideas already been discovered by others, it's actually the way the world works already.

Re:You're right it's a myth

[Anonymous Coward]

Always been in the 0% income tax bracket, so no, I don't know how the upper brackets worked. I thought the brackets affects all taxable income, so if someone went from like 25% to 35%, it would be on all taxable income, hence why people will do things, like donate to charity, to drop down a bracket. Now, if it's like you said, where it's only on the excess, then trying to drop down a bracket no longer makes sense whatsoever.

Re:From what I know of SalesForce, it's a perfect

[Whiteox]

And then there is NetSuite http://www.itwire.com/it-indus...

This is confusing to me...

[ckatko]

This is confusing to me. My job is literally installing Dynamics software for people. (Disclaimer: If you're offered that job, consider suicide as a better career path.)

Microsoft has put tons of money into their enterprise products. They're absolute piss and crash after a fresh install, but the work is still there. What good would acquiring Salesforce be for Microsoft? The only thing I can think of is that their software sucks so bad, they're going to eliminate their competitors by buying them. Because taking one gigantic, bloated, aging set of codebases (which have trouble even talking to each other!), and buying someone else's gigantic bloating, aging set of codebases, and finding some way to merge them into something new... that seems insane.

Re:This is confusing to me...

[Anonymous Coward]

Perhaps they are more interested in buying the customers than the software.

Re:This is confusing to me...

[Bite The Pillow]

If your job can install software in its own, and is doing so right now, consider a new line of work. Or consider expressing yourself in the same way that someone who might give you a job or raise might.

And acquisitions are often about the indirect products. Consumer base, patents, or just squashing competition. Wall street seemed confused as well. The article suggests a wholly owned subsidiary that would compete with, and gradually replace whatever Microsoft's product is, while being stripped of useful features.

Short term compatibility enhancements might bump the market cap, then a dip as people migrate to anything else, and a rebound as migrations fall apart and the product falls under volume licensing.

Look at salesforce ownership to see if they stand firm or sell out. Salesforce is not looking to sell, but won't ignore a stupid offer.

Re:This is confusing to me...

[Chas]

Mostly because out-of-the-box, Dynamics is good for exactly jack and shit. It requires extensive work to be made even marginally usable.

Salesforce, while not necessarily one-size-fits-all, is at least marginally useful from the get-go (though that could be a fluke).

Re:This is confusing to me...

[JDAustin]

Of course Great Plains was that way before MS bought them.

Money talks

[Taco Cowboy]

For a while, Salesforce seemed to be heading toward adopting PostgreSQL (e.g. they hired Tom Lane). Would have been great to see some open source goodness in the CRM space. But alas, it may not come to pass

The numero uno thing in all corporations is $$$, for without it, nothing else makes sense
 
For the bean counters, money is worth so much more than open source, so it should not surprise anyone of the imminent outcome

Re:From what I know of SalesForce, it's a perfect

[ShanghaiBill]

Just wait until Oracle jumps in the mix and starts a bidding war, because... well just because

Sounds good! I am all for more of Microsoft's cash being transferred to the shareholders of Salesforce.

Google Better

[Anonymous Coward]

Buy Google. Kill Schmidt and Page, burn their bodies, scatter the ashes across the Pacific Basin and Kill All Managers At Google!

Nuclear Scorched Earth in South Bay Babe ! Turn it into a 40 kilometer crater! Kill Everyone! Ha Ha Ha Ha

surprise... disbelief

[bazorg]

Microsoft Corp. is evaluating a bid for Salesforce.com Inc., after the cloud software provider was approached by another would-be buyer, people with knowledge of the matter said.

I wasn't expecting this kind of acquisition news even if I work for n the MS Dynamics field, but then again, the Blomberg piece is written in such a way that they can't he wrong no matter what happens next.

The Dynamics CRM product/SaaS has improved a lot in the last few releases,I'd be sad to see MS lose focus on its development by having to fit a direct competitor in the product family. While in the early 2000s the Navision acquisition brought 3 products with some overlap and life moved on, I get the impression that working with sfdc would be different, especially because this company has seen and positioned themselves as anti Microsoft and as an ally of whoever could disrupt the MS Office dominance.

You don't know much then..

[Anonymous Coward]

Posting anonymously since I happen to work one of the two companies mentioned. The only part up Microsoft's alley is the subscription model Salesforce has, which MS has wanted to implement for at least 5 years with Windows. Salesforce runs Linux and Solaris, there is no Windows anywhere. It would cost a mint to migrate, if it could be migrated. There has been some talk about testing the MS cloud, but I know the track record Azure has with Linux (not very good). Amazon EC is possible, Azure? probably not.. Further, MS required a few years ago that everything had to run on Windows within MS. They closed down their Unix R&D and canned all of their *nix internal people. Perhaps they changed their policy again and I am not aware of it?

The rumor mill said that if Salesforce received any type of offer they would have to at least consider it.. even if they had no intention of selling. I have no idea if this is required by law, or just etiquette for share holders.

Again from the rumor mill... it was kind of an annual thing that rumor would circulate claiming that Oracle was going to purchase Salesforce. I guess it has been a few years, so long overdue. I don't put much stock (pun intended) into the rumor mills.

Oracle I would think is a closer fit. While they lack "Cloud" and even "Subscription" model Salesforce uses Oracle as the back end and Solaris/Linux for the front ends. Not Oracle's brand of Linux, but it would not be difficult to migrate.

Re:From what I know of SalesForce, it's a perfect

[Chas]

Oh I dunno.

Current versions of Dynamics are so bad it's nearly impossible to get simple db backups, let alone meaningful data exports.

API?

[Guspaz]

Maybe this will result in a better .NET API from Salesforce? Because right now, they don't have one.

Re:API?

[JDAustin]

Figuring I've written C# apps to hit the SF API using a partner interface, I'd say they do have one. It just doesn't have everything you want.

Re:API?

[Guspaz]

Last I checked they just told you to generate a proxy class with the WSDL...

Please no - Salesforce WORKS....

[DigitalSorceress]

Oh gods please, no... I use Salesforce extensively every day... my company was a small company that got bought by a bigger one - the bigger parent company wanted to push us to Microsoft CRM but we convinced them to leave us alone - we had so many customizations and neat uses of their API that switching would have bene a pain.

Our parent company just announced they were being bought by a bigger company and the bigger company is a Salesforce user - the sales and support people audibly CHEERED at the prospect of getting away from MS CRM and back to SalesForce... and I can see why.

If MS buys it, first it gets re-branded as MS CloudCRM or whatever then they just pillage and destroy it over the long haul and we end up back on MS CRM after they slowly ruin it over a couple years..

I know that's speculation, but DAMNIT, Salesforce is worlds better than MS CRM and I can't think they're buying to do anything other than gobble up a competitor.

Re:Please no - Salesforce WORKS....

[Anonymous Coward]

I don't think . Nadella's Microsoft has been about getting it right. If anything they are buying it because it is better. They haven been rebranding stuff the buy lately. I actually have confidence in this.

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[account_deleted]

Comment removed based on user account deletion

Re:No it's not!

[erp_consultant]

"It's not even close a better fit, especially for consumers" - Consumers is a different angle. I was looking at it from a company standpoint. Your point on licencing costs is well taken.

Re:From what I know of SalesForce, it's a perfect

[Anonymous Coward]

You must be doing something wrong.

Re:From what I know of SalesForce, it's a perfect

[StikyPad]

This is one case where embrace and extinguish could actually be a good thing.

Re:From what I know of SalesForce, it's a perfect

[Chas]

Nope. I had Microsoft take three weeks to pull a working SQL backup out of a hosted Dynamics instance.

So, SOMEONE was doing something wrong. But it sure as fuck wasn't me.