NEW YORK (TheStreet) -- Shares of Microsoft (MSFT) - Get Report are falling 1.10% to $46.91 in Friday's afternoon trading after talks to purchase Salesforce.com (CRM) - Get Report fizzled due to a disagreement on price, CNBC reported.
Talks of Microsoft purchasing Salesforce.com started earlier this month when Bloomberg reported that Microsoft was evaluating a bid for Salesforce.com, but said no talks between the two companies were taking place. These rumors drove up shares of salesforce.com sharply higher, Bloomberg added.
While Microsoft was willing to offer roughly $55 billion for the company, founder and CEO of Salesforce.com Marc Benioff was said to have kept raising his expectations to as high as $70 billion, CNBC added.
TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio said yesterday: "Will he [Benioff] sell the company? He said don't bother him on these issues until he gets to $10 billion in revs and he passes SAP (SAP). I take him at his word."
"No love lost between SAP and CRM. You have to listen to that Salesforce conference call to hear how tough Benioff really is. Dare I say that CRM may actually be undervalued on 2017 earnings," said Cramer Thursday morning.
Microsoft is an American multinational technology company that develops, manufactures, and sells computer software. Salesforce.com is a global cloud computing company based in San Francisco.
TheStreet Ratings team rates MICROSOFT CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate MICROSOFT CORP (MSFT) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MSFT's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 6.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.35, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.65 is very high and demonstrates very strong liquidity.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The gross profit margin for MICROSOFT CORP is currently very high, coming in at 74.02%. Regardless of MSFT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MSFT's net profit margin of 22.94% compares favorably to the industry average.
- You can view the full analysis from the report here: MSFT Ratings Report