1. Google just got done completing a deal w/ Salesforce, why bother if they were negotiating a purchase of entire company anyway?
2. Google doesn't need CRM. CRM's business has nothing to do with search, and is built on top of Oracle databases, whereas Google's entire portfolio is built on BigTable "database". There's no synergy with owning CRM, frankly it would be a distraction to mgt.
3. CRM isn't cheap. Yes, everyone follows cashflow multiples with CRM, but is that really an accurate portrayal of earnings? Still have never seen a convincing argument that cashflow is a better indicator of long term earnings power. Near term, it works fine, but any acquirer will look more deeply than the BS methods Wall Street uses to value companies. Remember when Wall Street didn't account for stock option expense? Oh right, they still don't fully account for it, as they still try to print "non-GAAP" earnings to get around the MASSIVE expense of stock options for shareholder-owners. Ok, so what about gain-on-sale as a better example. Yes, that's more like it, gain-on-sale has time and time again proven to be a false indicator of future earnings power. CRM acquirers, buyer beware.
4. Source of rumor is private equity. This not only doesn't make sense due to private equity having nothing to do with a high multiple valuation such as CRM, but private equity shops aren't exactly "white shoe" in the information they portray. Their whole "M.O." is to sell equity buyers a new dream on an old story. Reminds me of snake-oil industry somehow.
$65.89 (04/24/08)
