In a bid to strengthen its presence in Europe,
) will open data centers in the U.K. (probably by Aug 2014), and
in France and Germany by 2015. Moreover, the company will
increase its headcount across Europe by 500 during the
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 require data to
be stored locally and not in data centers outside the country for
Salesforce's investments in the U.K., France and Germany comes
at an opportune moment as a study by Computer Weekly and Tech
Target forecasts that IT budgets in the U.K. are expected to
increase 3.6% in 2014 and that of the rest of Europe by 3%.
The study also revealed that the increase would be spearheaded
by investments in cloud computing and data analytics segments.
Salesforce.com, being a provider of cloud computing solutions,
could incrementally benefit from these investments.
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
We remain encouraged by the rising number deal wins at
Salesforce and the rapid adoption of the company's 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 rationalized by competition
International Business Machines
). Currency headwinds and an increase in investments could pose
Currently, Salesforce has a Zacks Rank #3 (Hold).
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