IBM, Salesforce Strike Deals to Purchase Cloud Computing Companies

Joe Goldman |

IBMIBM (IBM) announced on Tuesday that it has agreed to acquire Softlayer Technologies, a privately held cloud computing computing company. The deal is rumored to be in the ballpark of $2 billion and reflects IBM’s multi-year effort to expand its cloud computing services.

Salesforce.com (CRM) also announced Tuesday that it will acquire cloud marketing firm ExactTarget (ET) for around $2.5 billion. ExactTarget serves major clients like Toyota, Microsoft, NASA, and Expedia, and is Salesforce.com’s largest acquisition to date.

Both deals reflect the growing demand for customer relationship management (CRM) platforms in the corporate world. They are also indicative of the sky-high valuations of cloud-based companies, as ExactTarget was purchased at a 53% premium.

As a result of the Softlayer acquisition, IBM will form the IBM Cloud Services Division. Erich Clementi, who will oversee the division, said on Tuesday, “SoftLayer is a perfect fit for IBM. It will help us smooth the transition of our global clients to the cloud faster while enabling IBM to more efficiently offer them its broad portfolio of open IT infrastructure and software services.”

Meanwhile, Salesforce.com hopes to offer customers a complete CRM package with the acquisition of ExactTarget. Salesforce.com said in a press release that the acquisition will further enrich its already industry-leading CRM platform. “By combining ExactTarget’s leading digital marketing capabilities with Salesforce.com’s leading sales, service, and social marketing solutions, Salesforce.com will create a world-class marketing platform across email, social, mobile, and the web.”

IBM projects that cloud revenue will reach $7 billion annually by 2015 as a result of its aggressive global expansion. Meanwhile, Salesforce.com projects that ExactTarget will increase 2014 revenue by $120-$125 million and earnings by $0.12, despite ExactTarget’s lack of profitability over the last year.

Investors, however, were not impressed with the acquisitions. Shares of IBM traded down 1.2% to $206.66, while Salesforce.com shares dropped 3.5% to $39.59.

 

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Companies

Symbol Name Price Change % Volume
CRM Salesforce.com Inc 71.20 -0.42 -0.59 5,323,376
IBM International Business Machines Corp 158.11 -0.18 -0.11 3,374,838
SWH Stanley Black & Decker Inc. Corp Unit 2013 124.97 -1.84 -1.45 116,931

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