Well, what’s a billion dollars between friends? That’s the amount that Salesforce.com chairman and CEO Mark Benioff is tapping the market for (and maybe $150m more) in exchange for convertible loan notes, due 2018. Unsecured, by the way. Note holders will be able to convert “upon the occurrence of specified events” (not specified!) or at maturity, on terms to “be determined by negotiations between salesforce.com and the initial purchasers of the notes.”
Salesforce will hedge the notes “(which) could have the effect of increasing or preventing a decline in the price of salesforce.com’s common stock.” Some of the funds raised will be used to finance the hedging transactions, the rest “for general corporate purposes, including funding possible acquisitions of, or investments in, complementary businesses, services or technologies, working capital and capital expenditures.”
To buy into Benioff’s dream, you have to believe that if they keep shovelling more and more cash into the machine it will one day make a ‘real’ profit and provide a return to shareholders. Or, of course, find a buyer willing to believe same. I just don’t share the dream.