over 2 years ago • 3 mins
Salesforce reported better-than-expected earnings on Wednesday, as global firms turned to the cloud giant to get their projects – and distracted homebound teams – back on track.
What does this mean?
Kiss goodbye to those two-hour Candy Crush marathons you’ve been enjoying: more and more companies around the world are relaunching ventures that the pandemic brought grinding to a halt. That led to an uptick in demand for Salesforce’s products last quarter, with the company posting a better-than-expected 23% jump in revenue compared to the same time in 2020. Salesforce upped its earnings forecast for the rest of the year too, and it might be right to feel good about the future: whether everyone keeps working from home or piles back into the office, Salesforce’s bottom line stands to benefit.
Why should I care?
The bigger picture: Picking up the Slack.
Salesforce hasn’t been taking anything for granted, mind you: the company has just completed its $28 billion acquisition of collaboration platform Slack, which it expects to grow sales by more than 25% a year going forward. That’s not beyond the realms of possibility, especially since two of its latest acquisitions – software firms Mulesoft and Tableau – notched up revenue growth of 24% last quarter alone. And if it’s going to have any hope of staving off rival collaboration players like Microsoft and Zoom, it’ll certainly need to make good on that promise…
For markets: This means cloud war.
Salesforce is actually the second-biggest business software company in the world right now, trailing behind Europe’s SAP. But it might not stay that way at this rate: SAP’s revenue only climbed 3% last quarter, which might partly be why its stock is only up 14% so far this year versus Salesforce’s 24%.
Keep reading for our next story...
US data storage giant Western Digital is in talks to merge with Japanese chipmaker Kioxia in a potential $20 billion deal, so it’s a good thing they’re already so used to each other’s foibles.
What does this mean?
Western Digital and Kioxia have actually been working together on manufacturing-based research and development projects for a while. That might’ve helped give Western the edge in negotiations over other interested chipmakers – like, say, Micron Technology, which ended up walking away from talks earlier this year.
There’s at least one reason Kioxia appeals to Western: both chipmakers produce the memory chips used in your smartphones and computers, meaning the merger has potential for synergies. In other words, they should be able to slash costs or boost revenues by combining various overlapping departments. Western Digital’s shareholders certainly seem optimistic: they sent its stock up 8% following Wednesday’s announcement.
Why should I care?
For markets: A long road lies ahead.
There’s an elephant in the room here: Japanese regulators are bound to raise concerns that some of the country’s tech is winding up in the hands of an American company. No such qualms for the US, which would likely be in a hurry for them to get the deal over the line: the country is keen to boost its chipmaking capabilities to put up more of a fight against China. But it might not want to hold its breath: fellow chipmaker Nvidia is still waiting to get approval for its proposed acquisition of Britain’s ARM, almost a year after the deal was first announced.
The bigger picture: Patience is a virtue.
Between a flood of new smartphone launches, growing demand for PCs, and the increase in 5G adoption, demand for memory chips has never been higher. Kioxia, then, might be glad it bailed out on plans to list on the stock market last year, when the chipmaker was valued at $16 billion – around 25% less than Western Digital is reportedly offering.
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