Markets on Wednesday digested news that the market’s generally expected short-term interest rate rose by a quarter, and the stock market rebounded on Wednesday. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 Index (SNPINDEX:^GSPC) fell and recovered, but ended up falling.
Today’s stock market
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Technology stocks continued to decline due to improper handling of Facebook’s personal data, even though share prices rose slightly today. The Technology Select Sector SPDR ETF (NYSEMKT:XLK) fell 0.6%. Crude oil prices rose and energy stocks soared; energy selective sector SPDR ETF (NYSEEKK:XLE) rose 2.6%.
Cloudsoft pioneer Saleforce yesterday announced that it will acquire MuleSoft for $6.5 billion in cash and stock transactions. On Tuesday, MuleSoft rose 23% when trading news leaked, and Salesforce shares fell 2.7%. Based on the price of Salesforce shares at the close of Monday, MuleSoft shareholders will receive $36 in cash and $0.0711 in Salesforce common stock, for a total value of $44.89 per share.
MuleSoft went public a year ago. It builds a software platform that allows companies to build application networks that combine different cloud-based and on-premises applications, databases, and devices. The company is relatively small and last year’s revenue was only 296.5 million U.S. dollars, but it is growing rapidly. In the most recent quarter, MuleSoft posted non-US GAAP loss of $0.12 per share.
Salesforce CEO Marc Benioff said at the press conference: “Every digital transformation begins with customers. “Salesforce and MuleSoft have teamed up to enable customers to connect all the information within a company across all public and private cloud and data sources – from Fundamentally strengthen innovation. I am very pleased to welcome MuleSoft to Salesforce Ohana. ”
Salesforce has proven that it excels at capturing software companies to enhance their products and help drive ambitious top-line growth goals. The price of 22 times revenue may be amazing, but with cloud software now one of the hottest areas in technology, this acquisition may pay off in the long run.
General Mills sink due to rising costs
General Motors shares fell 8.9%, the company announced its third-quarter sales and earnings exceeded expectations, but cut its profit outlook this year. Sales rose 2.3% to $3.88 billion, while analysts expected $3.78 billion. Adjusted earnings per share was $0.79, exceeding the market’s $0.01 forecast.
Despite the loss of profits, CEO Jeff Harmening heard a warning about rising costs and stated in the press release:
Our main goal this year is to strengthen our performance while maintaining efficiency. Although I am pleased that we achieved the first part of this goal, strong consumer marketing, innovation and in-store execution led to organic net sales growth for the second consecutive quarter, but I was disappointed with our results. Our operating profit in the third quarter was far below our expectations, and cost pressures are affecting our full-year outlook.
Looking ahead, General Motors cut its revenue forecast from negative 1% to 5% to 6%. The company accused “supply chain costs are higher than expected, including freight and logistics.”
General Mills is trying to revive economic growth by stripping old, stagnant brands and replacing them with new growth businesses, such as the acquisition of Blue Buffalo Pet Products. However, the headwinds of input-cost inflation, especially transportation costs, are becoming stronger than expected.