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Salesforce to Acquire Rypple - Analyst Blog

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Cloud computing major Salesforce.com ( CRM ) recently announced that it has entered into an agreement to acquire human resource software company Rypple, which specializes in performance management and goal-setting.

The deal is subject to some customary conditions and is expected to be completed by the first quarter. The company, however, revealed that the acquisition will have a negligible impact on its fiscal 2013 revenues.

The to-be-acquired company, Rypple, offers a cloud-based platform that provides feedback to the employees regarding their performance and also helps management in evaluating employee performance. The acquisition is also expected to facilitate recruitment, management and employee empowerment in the social world.

Rypple already possesses a mobile application that helps managers to provide real-time feedback to staff, which helps in imparting training, achieving goals and publicly recognize colleagues. Rypple has a strong clientele, which includes the likes of Facebook, Gilt Groupe and Spotify.

The completion of this acquisition will mark Salesforce's entry into the human resource management module of the social enterprise. The company has been consistently introducing new products to expand its customer base, thus driving further profitability.

This apart, another popular module recently launched by the company is the Salesforce Chatter, an enterprise social collaboration application based on the Salesforce 2 platform. We believe that free add-on offerings like Chatter will enable Salesforce to differentiate its core offerings, thus making them more attractive for customers.

The company's rapid customer growth is a reflection of an increased adoption rate and market acceptance of enterprise cloud computing. Add-ons such as Chatter should continue to enhance its competitive advantage and position it well for future growth.

Moreover, we also believe that the acquisition of Radian6 in May will help the company to tap the huge growth opportunity in media monitoring. However, continuous R&D investments remain a concern as it could rationalize margins to a certain extent.

We also remain apprehensive about the strong competition in CRM application and cloud-computing areas. Google Inc. ( GOOG ) and Microsoft Corp. ( MSFT ) are worth mentioning, as they have been fighting to win government clients at local, state and federal levels to use their online e-mail and other applications that fit into the cloud-computing space. But the acquisition of Radian6 as well as its strong product line up will help the company sustain profitability, going forward.

Currently, Salesforce.com has a Zacks #3 Rank, implying a short-term Hold rating.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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