What's on Salesforce.com's shopping list?

Analysts say the CRM vendor's $500 million debt offering could foretell an acquisition spree

Salesforce.com's move this week to raise US$500 million through a debt offering has observers speculating the on-demand CRM (customer relationship management) vendor is set to go on a shopping spree, but opinions vary on exactly what one will entail.

There's been a lot of buzz that Salesforce.com will buy Constant Contact, which makes e-mail marketing software for small businesses, said 451 Group analyst China Martens.

Constant Contact's current market capitalization is close to $500 million. With 300,000 customers, Constant Contact could shore up Salesforce.com's standing in the small business arena, where it is under assault from a variety of competitors. And a combined offering could present a "nice little suite of stuff" for those users, Martens said.

Meanwhile, other speculation has Salesforce.com buying an HCM (human capital management) vendor such as Taleo or SuccessFactors, "but again, these are big companies," she said. SuccessFactors' market capitalization was roughly $1.3 billion as of Wednesday, and Taleo's stood at around $740 million.

SaaS (software as a service) consultant Bob Warfield sees a pair of potential scenarios.

Either Salesforce.com will scoop up its rival CRM competitor RightNow, which had a market capitalization of roughly $540 million on Wednesday, or is "preparing to go on a spree that will involve multiple little guys," Warfield wrote in a blog post.

"With $500M they could buy a social player, a marketing automation player, and a sales comp player, all of which would be highly complementary to their CRM core."

While it is difficult to say precisely which companies Salesforce.com may buy, "any prudent CRM CEO has to be looking at the economic realities of the moment," said analyst Denis Pombriant of Beagle Research. "A conclusion can be drawn, and should be drawn, that CRM needs to be very different from what it is today."

"Every CRM vendor needs to look at incorporating more technologies that are going to enable to operate in a world that has expensive transportation costs, changing markets that are leaning toward maturity and customers that are increasingly sophisticated," he added. "The way you go after that is through incorporating things like video, VoIP, and a full suite of in-bound and out-bound social media."

While Salesforce.com's recently announced Chatter product set fits into the last category, it's "just the tip of an iceberg," Pombriant said.

If history is any guide, Salesforce.com will continue rounding out its portfolio with smaller deals, versus a big-bang, headline-grabbing acquisition.

In December, it quietly purchased SaaS collaboration vendor GroupSwim. That move followed its purchase of call-center technology vendor InStranet in 2008 and content management player Koral in 2007.

"What Salesforce.com will be interested in is embryonic companies with advanced ideas," Pombriant said. "If you look at Salesforce.com's history, they do tend to buy embryonic companies, and they have a very clear idea about those fit into the CRM master plan."

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags Mergers and acquisitionsSalesforce.com

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Chris Kanaracus

IDG News Service
Show Comments

Essentials

Brother MFC-L3745CDW Colour Laser Multifunction

Learn more >

Mobile

Exec

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Tom Pope

Dynabook Portégé X30L-G

Ultimately this laptop has achieved everything I would hope for in a laptop for work, while fitting that into a form factor and weight that is remarkable.

Tom Sellers

MSI P65

This smart laptop was enjoyable to use and great to work on – creating content was super simple.

Lolita Wang

MSI GT76

It really doesn’t get more “gaming laptop” than this.

Jack Jeffries

MSI GS75

As the Maserati or BMW of laptops, it would fit perfectly in the hands of a professional needing firepower under the hood, sophistication and class on the surface, and gaming prowess (sports mode if you will) in between.

Taylor Carr

MSI PS63

The MSI PS63 is an amazing laptop and I would definitely consider buying one in the future.

Christopher Low

Brother RJ-4230B

This small mobile printer is exactly what I need for invoicing and other jobs such as sending fellow tradesman details or step-by-step instructions that I can easily print off from my phone or the Web.

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?