Mad Hedge Technology Letter
June 11, 2019
Fiat Lux
Featured Trade:
(BIG TECH’S FEEDING FRENZY)
(CRM), (DATA), (GOOGL), (NFLX)
Mad Hedge Technology Letter
June 11, 2019
Fiat Lux
Featured Trade:
(BIG TECH’S FEEDING FRENZY)
(CRM), (DATA), (GOOGL), (NFLX)
The start of the cloud consolidation is upon us.
The cloud kings, in order to stay ahead of the competition, are resorting to acquiring growth through M&A.
We are still in the sweet part of the growth phase with companies showing they can pull off a mid-20% annual growth rate.
Salesforce (CRM), the leader in client relationships management platforms, took this cue to add to its army of software cloud options by snapping up Tableau (DATA).
What does Tableau do?
Tableau software takes the inputs of raw data and transforms it into easily decipherable dashboards and diagrams.
The company has been expanding its product line to include data cleanup and machine learning tools, enabling it to compete in the wider data-warehousing business.
It has more than 86,000 customers, including Verizon Communications Inc. and Netflix (NFLX).
Let me remind you why big data companies are the golden goose of the technology industry and why they are intrinsic to the fortunes of tech companies.
The idea of big data has been around for years; most organizations now are acutely aware that if they capture all the data that flows into their businesses, they can apply data analytics and generate value creation by making the best strategic decisions suggested from the underlying data.
If upper management hasn’t figured this out yet, they are probably out of business by now.
Let’s roll back to the 1950s, decades before anyone coined the term “big data,” businesses were using rudimentary analytics, basically numbers in a spreadsheet that were manually registered, to unearth paradigm shifts and market opportunities in their industry.
The smorgasbord of goodies that big data analytics offer the world is legendary.
Speed and efficiency are at the top of the list.
Whereas a few years ago, collecting vital information that could be used for future decisions took pace much slower than today.
Identifying insights for immediate actionable business implementation is happening in real time now.
This new mode of execution and organization offers firms an outsized competitive edge they could only dream of.
Harnessing data and utilizing it in the best way in order to monetize its business model is now the norm.
The end result is repeatedly higher trending profits and better customer experience.
Companies and its expenses were also reaping the rewards of this new model with major cost reduction.
Big data technologies can expect significant cost advantages when it comes to storing large amounts of data – plus they can identify more efficient ways of doing business.
Companies now have the pulse of the market and demonstrate the ability to gauge customer needs and satisfaction allowing the company to identify new markets.
This, in turn, has firms often migrating into completely different parts of the economy.
Salesforce’s deal with Tableau isn’t the first and won’t be the last cloud deal.
This is just the beginning.
The decision comes after Google (GOOGL) agreed to buy Looker Data Sciences Inc. for $2.6 billion last week, a move to expand Google’s offerings for managing data in the cloud.
I envision Google wading further into the enterprise software waters as they attempt to relieve their reliance on Search as the primary money maker.
Acquiring the best software then spreading its application through its other assets would be a great initiative too.
For example, creating an enterprise service for YouTube channels and charging YouTube creators a fee to operate a cloud-based product that specializes in optimizing their YouTube channel would be a compelling idea.
There are a million different machinations that Google could elect for, and letting the genie out of the bottle in a good way will do wonders.
After all, global spending on technologies and services that enable digital transformation will surpass $2 trillion in 2022 serving up a long and wide runway for companies that can hunker down and carve out premium enterprise software on the cloud.
As for Salesforce, the stock sold off on anxiety that Salesforce is overreaching to add growth.
There is definitely some truth behind this weakness.
Could this be the end for Salesforce’s growth supercycle?
Salesforce is a pure software growth strategy and the stock has gone nowhere trading sideways for the past 6 months.
Make no bones about it, Salesforce absolutely overpaid for Tableau and even announced that its second headquarter will be stationed in Seattle, a stone’s throw from the headquarter of Tableau.
Founder and Co-CEO of Salesforce Marc Benioff is betting the ranch on data analytics and hopes the subsequent synergies will result in cost savings, better cloud products, a resurgence in revenue growth while wielding a first-rate army of software engineers.
As for now, even the tech market is single-handedly propped up by the Fed who have signaled even more dovish monetary policy.
Wait to read the tea leaves on whether these new additions to Salesforce will meaningfully result in growth or not.
For the time being, Salesforce and tech remain in a precarious position whipsawing because of Trump’s high-risk geopolitical strategy and the Fed attempting to cushion any economic blows from an administration hellbent on tariffs.
Legal Disclaimer
There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.
This site uses cookies. By continuing to browse the site, you are agreeing to our use of cookies.
OKLearn moreWe may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.
Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.
These cookies are strictly necessary to provide you with services available through our website and to use some of its features.
Because these cookies are strictly necessary to deliver the website, refuseing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.
We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.
We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.
These cookies collect information that is used either in aggregate form to help us understand how our website is being used or how effective our marketing campaigns are, or to help us customize our website and application for you in order to enhance your experience.
If you do not want that we track your visist to our site you can disable tracking in your browser here:
We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.
Google Webfont Settings:
Google Map Settings:
Vimeo and Youtube video embeds: