Microsoft Corporation (NASDAQ:MSFT) may be acquiring a company that is vulnerable to disruption by newer companies with fresher technologies if it were to acquire Salesforce.com, inc. (NYSE:CRM).
That’s according to Roger McNamee in an interview with CNBC where he explained why he thinks Microsoft Corporation (NASDAQ:MSFT) should not buy Salesforce.com, inc. (NYSE:CRM).
According to the Elevation Partners co-founder, he would send a letter to the Board of Directors begging them to not proceed with the acquisition of Salesforce.com, inc. (NYSE:CRM) if he were a Microsoft Corporation (NASDAQ:MSFT) shareholder.
McNamee points out that large transactions in the software industry have historically been disastrous in the aftermath.
“If I’m Microsoft, they shouldn’t be waiting until companies are the scale of Salesforce to acquire them. They should be building things internally. They have a lot of opportunities to do that,” McNamee tells CNBC, adding, “In fact, I think we are coming up to the time where Salesforce will be vulnerable to new technology. I do think that this is one of those things that this is fun to talk about – and if I were [Marc] Benioff [Salesforce CEO] I would hit the bid in a heartbeat if somebody offered $50 billion plus – but I think from Microsoft’s point of view, it would be strategically a terrible mistake.”
Microsoft Corporation (NASDAQ:MSFT) has recently been reported to be studying a bid for Salesforce.com, inc. (NYSE:CRM) in a deal that would be worth upwards of $50 billion or even well into the $70 billion range.
Other industry observers like Dan Ives of FBR Capital Markets think the deal would be great for the Window’s maker. Not McNamee, however.
“If I’m Microsoft, what I want from Salesforce is less the product than sort of the joie de vivre that comes with a company run by Marc Benioff. I don’t think Microsoft is shopping for a new CEO. As a consequence, I think the one thing they are certain not to get if they were to acquire Salesforce would be the culture. I think, in fact, a large number of people would leave right away. They would have the products and the products would be of some value, but I don’t think you can justify $50 billion or more to acquire a company at that stage,” he tells CNBC.
Jean-Marie Eveillard’s First Eagle Investment Management owned about 36.23 million shares of Microsoft Corporation (NASDAQ:MSFT) by the end of 2014. Also by the end of last year, Christopher Lord’s Criterion Capital owned about 2 million Salesforce.com, inc. (NYSE:CRM) shares.
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