SuccessFactors Shares Skyrocketed: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of SuccessFactors (NYS: SFSF) soared a staggering 51% on Monday after tech giant SAP (NYS: SAP) said it would buy the online software specialist for $3.4 billion.

So what: The all-cash deal values SuccessFactors at $40 per share and represents a whopping 52% premium to its Friday closing price. SAP is making the move to catch up with the likes of Oracle (NAS: ORCL) and (NYS: CRM) in the rapidly growing cloud computing space, and judging from its stock's flat trading today, investors don't seem to mind the huge premium being paid to do it.

Now what: SAP said the deal will negatively impact earnings next year, but will be accretive from 2013 forward. And on the top line, management expects revenues of at least 21 billion euros by 2015. But while the acquisition should help SAP keep up in the cloud computing race, just being able to enter it seems to be getting dangerously expensive.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Oracle. Motley Fool newsletter services have recommended buying shares of Salesforce. Motley Fool newsletter services have recommended shorting Salesforce. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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