Just 12 months ago, not many people even knew Zoom and Slack and Google Meets were a "thing," but of course they're pretty much household names now, simply because they've helped keep business going while office buildings all over the country emptied out.
I think throughout 2021, people will go back into offices and schools once they've had the coronavirus shot (or shots), but a look at all the deals going down right now tells me that "telecommuting" or "work from home" or whatever you want to call it, is probably going to remain way more popular in 2021 than it was in, say, 2018 and 2019.
The case in point, of course, would be this week's biggest deal, which saw Salesforce.com Inc. (NASDAQ: CRM) gobble up Slack Technologies Inc. (NYSE: WORK) for a cool $27 billion and change. Nobody forks over $27.7 billion on a hunch, right? Salesforce probably sees the same on-trend growth potential I do.
Now, as happens sometimes when companies drop billions or tens of billions on an acquisition, CRM shares are dropping like a rock right now. The stock's down more than 8% since the deal was announced. Some of this is "selling the news," and some of it has to do with lowered guidance on growth.
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A lot of people will see Salesforce's decline and weigh it against the growth of the telecommuting trend, and think, "Sweet - the stock's on sale right now"; people will want to buy the dip.
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It's the Next Big Deal I'm Looking At
Salesforce has made a couple of big, noteworthy buys in the last few years, like a $6.5 billion deal for enterprise software integration MuleSoft back in 2018, and $15.3 for data visualization firm Tableau in 2019.
But the Salesforce-Slack deal is, let's face it, one that might not have made headlines - or even happened at all - just 18 months or so ago, but software like Slack is an absolute must if your workforce is scattered all over town, or the entire country; it's basically a gigantic, simple-to-use interoffice communication and collaboration platform.
That it now belongs to Salesforce is a sign that it's staking a claim as a player, if not exactly the player, in remote working.
So, if you own CRM shares, by all means, hang on to them. You'll probably be glad you did.
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But folks who don't hold Salesforce - or who do, but want maximum profit potential in the telecommuting trend - will get much more out of FireEye Inc. (NASDAQ: FEYE).
Now, at first glance, FireEye is not an obvious player in the work-from-home revolution. It's actually a cybersecurity company with a massive toolbox - an arsenal, really - it uses to protect clients from digital desperados everywhere.
Back in March 2020, when Americans were hunkering down for the first wave of COVID-19 lockdowns, it became obvious that most of their telecommuting solutions weren't quite "there" yet when it came to safety and security. After all, remote working had been kind of a small niche for years; it wasn't quite ready to become the national pastime.
A lot of us had to quickly get familiar with how to use webcams, or when and why to use a mute button, but lots of people had a rougher time.
There were dozens of reports of bad guys breaking into working sessions to raise all kinds of hell. People started calling it "Zoom-bombing."
Some of it was merely annoying, but there were some alarming cases where actual harm was done - like from stolen personal information, say. There were even instances of hate crimes. At one point, the FBI was investigating 240 cases where trolls "bombed" random Zoom meetings - including online classes - with images of child abuse.
So America's big experiment with working remotely wasn't as smooth or secure as it could've been, but it certainly brought the desperate need for cybersecurity companies like FireEye into focus.
The Remote Office Needs a Tough Security Guard
FireEye is a fairly small company by Silicon Valley standards, with a market cap of $3.4 billion and revenue of $889 million in 2019.
The company's stock is up around 62% from its March 2020 lows, but that's not surprising for a tech sector star; it's still got another 21% or so to run till it gets back its 52-week highs.
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So the stock's been doing very well, and the company itself has been keeping busy.
Like a lot of Silicon Valley cybersecurity companies recently, it's been doing some acquiring of its own. Last month, FireEye shelled out $186 million to buy Respond Software.
Respond is an interesting outfit - a very interesting one. It has software that helps managers and employees who aren't cybersecurity analysts or specialists investigate and, importantly, understand, all kinds of cybersecurity incidents, like data breaches and so on.
Cybersecurity specialists are expensive, and there just aren't all that many of them, so this company's product is like an ace in the hole for management everywhere.
Cybersecurity Ventures predicts global cybercrime will cost global businesses and individuals $10.5 trillion by 2025, and that doesn't, so far as I know, factor in the remote working revolution.
The prospect of tens of millions of workers, very few of whom are cybersecurity specialists, sending all kinds of valuable corporate and personal information flying through cyberspace has got to have crooks licking their chops in anticipation.
A company like FireEye, able to offer a product like Respond, is perfectly positioned - and not just from the massive need for cybersecurity.
This company makes an almost irresistible takeover target for seriously hungry big Silicon Valley fish. Even if a buyer were to cough up a 20% or 30% premium, they'd still be getting a great deal for much less than $10 billion - almost peanuts by Bay Area standards - and you, as a shareholder, would do even better. What I would do is this: Buy FEYE at market, get comfortable, and wait a year or so for the takeover bid I'm sure is coming.
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About the Author
Andrew Keene is a globally known trader and a renowned expert on all things options.