Science & Technology
Science and Technology
Science and Technology
Fri, December 10, 2010
Thu, December 9, 2010
Salesforce.com, Google, Microsoft, Western Union and Moneygram International
CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: Salesforce.com Inc. (NYSE: [ CRM ]), Google Inc. (Nasdaq: [ GOOG ]), Microsoft Corp. (Nasdaq: [ MSFT ]), Western Union Co. (NYSE: [ WU ]) and Moneygram International Inc. (NYSE: [ MGI ]).
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Here are highlights from Thursdaya™s Analyst Blog:
CRM to Acquire CloudApp Provider
Leading on-demand customer relationship management (CRM) and cloud computing company Salesforce.com Inc. (NYSE: [ CRM ]) announced that it has signed a definitive agreement to acquire cloud-based application solution provider, Heroku.
The deal has already received approval from Herokua™s board of directors and shareholders and is expected to be wrapped up by end January 2011. The acquisition will cost Salesforce $212.0 million in cash. Additionally, Salesforce will grant restricted shares worth $27.0 million and pay $10.0 million for unvested Heroku shares.
Founded in 2007, Heroku is a multi-tenant platform and hosting environment, which is based on the Ruby programming language. Heroku makes deployment and management of next-generation cloud applications easier and more pocket friendly. The latest programming language of Cloud 2, Ruby application, is gaining significant traction in recent days owing to its simplicity.
The acquisition will enable Salesforce to advance in the Cloud 2 platform. Herokua™s Ruby-based platform-as-a-service will allow Salesforcea™s customers to easily develop advanced applications. Additionally, the takeover will extend Salesforcea™s offerings, since customers will be able to access numerous cloud-based application programs developed by Heroku.
As per the findings of research firm IDC, revenues from information technology cloud services could reach $55.5 billion in 2014. Salesforcea™s cloud-exposure and Heroku synergy could lead to a large share in this growing opportunity.
Although the Heroku acquisition will expand the customer base and market share of Salesforce, it may not move the revenue needle much for the upcoming quarters or fiscal 2012. Salesforce will also witness a dilution of approximately 2 cents in its 4Q11 earnings and roughly 12a"13 cents in its FY12 earnings. Moreover, the impact of the acquisition will be greater on a GAAP basis, than on a non-GAAP basis.
Salesforce.com reported decent third quarter fiscal 2011 results. It also provided an encouraging guidance for the fourth quarter and raised the full-year fiscal 2011 expectations on improving fundamentals.
We, however, caution investors about strong competitors in the CRM application and cloud computing areas. Google Inc. (Nasdaq: [ GOOG ]) and Microsoft Corp. (Nasdaq: [ MSFT ]) have especially been fighting to win government clients at local, state and federal levels to use their online e-mail and other applications that fit in the cloud-computing space.
Currently, Salesforce.com has a short-term Hold recommendation, as is indicated by the Zacks #3 Rank.
Western Union Hikes Dividend
The worlda™s leading money transfer company Western Union Co. (NYSE: [ WU ]) announced a hike of 16.67% in its quarterly dividend to 7 cents per share. The increased dividend will be paid on December 31, to shareholdersa™ of record as of December 20.
Western Uniona™s dividend is supported by its generation of strong cash flow from operations of over $1 billion for the past three years. For full-year 2010, management expects GAAP cash flows from operating activities of $900 million to $1 billion.
On the basis of the increased dividend, Western Uniona™s dividend yield will be 1.50%, up from the current 1.30%. The companya™s peer Moneygram International Inc. (NYSE: [ MGI ]), however, does not pay any dividend.
In the fourth quarter of 2009, Western Union increased its dividend to 6 cents per quarter, or 24 cents annually, a significant increase from the previous annual dividend of 4 cents per common share.
Western Union repurchased 6 million shares in the quarter at an average price of $16.15. About $486 million remains under the current stock repurchase authorization. The company has returned more than $630 million year-to-date to shareholders through dividends and share repurchases.
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