) is looking for strategic acquisitions to strengthen its foothold
in Germany, reported Bloomberg. Salesforce's CEO Marc Benioff also
highlighted that the company is banking on Germany with a targeted
sales of $1 billion.
Salesforce is expected to expand its German headquarters in
Munich and opened another office in Berlin. The company has also
roped in T-Systems, a unit of Deutsche Telekom, as a provider.
Moreover, Salesforce reported that companies such as Bayer Vital,
Commerzbank and Software AG coupled with Endress&Hauser,
airberlin and BMW have selected its cloud-based services.
Salesforce's comments come at an opportune moment as a study
conducted by Computer Weekly and Tech Target forecasts that IT
budgets in Europe will increase at an average rate of 3% in 2014.
The study also revealed that the increase would be propelled by
investments in cloud computing and data analytics segments.
Salesforce, being a cloud computing solution provider, could
incrementally benefit from this increase due to its expansionary
Moreover, the company would be able to diversify its
international revenues, going forward. Notably, in fiscal 2014,
Salesforce derived 18% of the total revenue from Europe (17% in
fiscal 2013), which increased 41.1% on a year-over-year basis. In
the last reported quarter (first-quarter 2015), Salesforce's
revenues from Europe increased 42%. So, to-date, investment in
Europe has yielded positive results.
It is worth mentioning that Salesforce had earlier outlined its
plans to expand in the European counties by opening data centers in
the U.K., France and Germany by 2015. The opening of the data
centers in these countries will help Salesforce to tap local small
and medium businesses as well as government agencies. Government
agencies usually prefer data to be stored locally for security
We remain encouraged by the rising number deal wins at
Salesforce and the rapid adoption of its cloud-based solutions.
Overall, the company's diverse cloud offerings and strong spending
on digital marketing remain the positives. Moreover, the company's
strategic acquisitions and the resultant synergies are expected to
remain long-term positives.
Although the company is growing reasonably in the cloud market,
growth prospects have been tempered by competition from
International Business Machines
). Currency headwinds and increase in investments could pose
Currently, Salesforce has a Zacks Rank #3 (Hold).
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