SAN FRANCISCO — Two weeks ago CMSWire asked the obvious: Why the hell would Salesforce want to buy Twitter?
Now the company's investors are asking the same thing.
In a meeting with investors yesterday following his Dreamforce keynote, Salesforce founder and CEO Marc Benioff was forced to defend his apparent interest in buying the microblogging platform.
The investors weren't interested in talking about applications, platforms, the Internet of Things or the cloud. They didn't want to discuss the massive attendance of more than 170,000 people at the company's annual user conference here this week or praise Benioff for his showmanship in designing an agenda including everything from a rapper to the 25 Buddhist monks 25 leading "on-
They wanted to know whether Salesforce was actually considering buying Twitter — and ask Benioff the same thing CMSWire asked. Why would the company be interested in doing that?
The question that all but one investor asked over and over again was, "How much value are you willing to give up for the company with the 140 characters?"
Benioff said several things, not all of them satisfactory to the quizzical investors. He indirectly referred to Twitter as an "unpolished jewel" and described it as a "great" and unique brand. Buying it represents a "one time trade opportunity," he added.
He even went on to say, though he might have been likening Twitter to LinkedIn at this point, "If you didn't get that asset, what are you going to buy?"
Benioff tried to soothe investor anxiety, noting "We look at a lot of things. And we pass on almost everything. In fact, the number of things that we acquire is very limited and very few."
But it hardly seemed enough reassurance. A bid for Twitter could destroy $12 billion to $17 billion in value for Salesforce, Mizuho analyst Abhey Lamba wrote in a research note. That value could take two to three years to recapture, he said.
"We remain concerned about management's quest for acquiring Twitter," Lamba wrote.
He obviously isn't alone.
Benioff tried to shift the focus of the conversation by referencing the newer components of the company's product portfolio including Einstein, the CRM platform's new Artificial Intelligence (AI) capability; its newly acquired productivity suite Quip; and another new investment, data management platform Krux.
He also reminded the group gathered for the meeting at the St. Regis Hotel that they had been pleased by his grab of eCommerce platform Demandware. He then went a little further, saying that acquisitions typically boost the stock price.
"We are super-conscious of what any deal means to our shareholder or our stockholder. I think that our history and track record in acquisition is maybe better than anyone," he said.
Investors still seemed dissatisfied.
Analyzing Twitter Rumors
As the meeting went on, it became obvious that Benioff would indeed be interested in Twitter as long as the price is right.
"We would never do the kind of deals (expensive) that I've (been) reading about. The kind of things I've been reading about have been so extreme, I'm like, 'Jesus, do they really think that we would do a deal at that level?' That said, we have to look at this. You have to look at everything. It gives us so many ideas, so many visions for the future. All the things we learn in these M&A processes is incredible," he said.
Twitter's price may have just become more flexible: Recode reported yesterday that both Google and Disney have stopped pursuing Twitter and that Apple is an unlikely suitor.
Benioff said deals like his Demandware buy, Microsoft's proposed acquisition of LinkedIn and now Twitter are "once-in-a-lifetime trades."
"Once they trade, they're not going to trade again, so you better be damn sure that it's not right for you. These are marquee, monopolistic brands that are one-time trades and then they're gone."
One investor went so far as to ask Benioff whether he would buy Twitter defensively so that no one else could have it.
All he said was that Salesforce's management team and board of directors always apply a "highly disciplined process" when considering any acquisition.
Benioff Was Noncommittal
Benioff was noncommittal, refusing to clearly articulate whether he was making a bid for Twitter.
He did assure the group that he knew that leaving the question open "is not good for you guys and not good for the (your) portfolio."
"I'm sorry that this is a dark cloud over the stock and over Dreamforce," he said, "But it is what it is."
Other Dreamforce Tidbits
There were a few other interesting tidbits that came out during the meeting, namely that Salesforce tried unsuccessfully to acquire LinkedIn not for the professional networking site's data, but for the business itself. Benioff claims LinkedIn isn't being run well because its management does not understand its value or deferred revenue.
He also said Salesforce is urging the European Union to block Microsoft's acquisition of LinkedIn because of concerns over how Microsoft plans to use LinkedIn’s data in its productivity suite.
"I didn't expect Microsoft (namely Microsoft EVP Scott Guthrie) to go, 'Now look at this, it's got this jewel. Now we can take this jewel and alter our office productivity suite in a way that no competitor can come in. You can't combine assets to create barriers to entry, that's illegal. That's why we want to flag that to the US Federal Trade Commission and European regulators."
Benioff also noted that Salesforce wasn't the only company protesting the acquisition. Oracle and Infor are among several other tech vendors who apparently have concerns.
Title image by Jason Briscoe