17:11 PM

Is Salesforce In Play? Benioff Visited Cisco

Just a few days after I reported that Salesforce had approached Oracle to gauge interest in a buyout at $75 per share, Marc Benioff, CEO of Salesforce visited Cisco Systems.

A senior source close to Cisco, said that Mr Benioff was summoned as a direct result of my post. One of his meetings was with executives of Webex, a software as a service (SAAS) company acquired by Cisco last year for $3.2bn in cash.

Foremski's Take: What does this mean? It could mean that Cisco had exploratory talks with Mr Benioff about Saleforce.com being for sale.

Cisco's acquisitions such as Webex, have pushed it towards the SAAS market as it seeks new growth areas related to its network business. An acquisition of Salesforce.com [CRM] would vault Cisco into the middle of the SAAS market as a major player.

Other companies that would likely be interested in Salesforce are IBM, Microsoft, Hewlett-Packard, and SAP.

Google might also interested in Salesforce because its footprint in the enterprise IT sector is very small. A Salesforce acquisition would provide it with a well recognized brand in IT markets. And Google's computing platform could be used to scale Salesforce's applications and improve perceptions of reliability. Scaling has been an issue for potential customers of Salesforce. Google has shown its computing platform can scale rapidly by tens of millions of users.

Cisco doesn't understand the enterprise software market, at least yet. It would be difficult for it to leverage Salesforce. Microsoft is distracted by its takeover of Yahoo. SAP is too slow moving and has yet to demonstrate a viable SAAS strategy.

HP really gets SAAS. It's top strategist Shane Robison recently described a strategy in which HP sees every aspect of its future business through services:

Silicon Valley Watcher: Essential Viewing: Chief Strategist Shane Robison - The Where and Why of HP


IBM has been determined to stay out of the IT applications business since the late 1990s and has avoided acquiring any IT apps companies. But Salesforce could be seen as a type of "middleware" play with its application platform strategy.

I think Salesforce is more compatible with the Oracle culture. And that Mr Benioff's ambitions would be far better fulfilled as an eventual replacement for Larry Ellison, the 63 year old CEO of Oracle, who is nearing retirement.

Please see: Is Salesforce Worth $75/Share To Oracle?

I'm hearing from a reliable source that Salesforce.com has approached Oracle to gauge if there is any interest in a sale at $75 a share. That would be almost a 50 per cent premium over Friday's close of $50.87.
The deal would make sense:
-It would provide Oracle with a strong brand in online apps and a strong transition road map to cloud computing and a software as a service business model.
-Salesforce would benefit from Oracle's dominant position in enterprise IT markets, which would help in convincing corporations that Salesforce is a scalable and viable enterprise solution.

Please also see: The Influence Of The Blogosphere Boosts Salesforce By Over Half-A-Billion Dollars