Salesforce's Q1 will feature a lot of M&A chatter

Salesforce reports its fiscal first quarter earnings on Wednesday, but most of the focus will revolve around whether the company would sell out to a rival.

The biggest event in Salesforce's quarter was the rumors swirling around a potential acquisition of the company. Salesforce shares indicate that Wall Street is putting a low probability that the company will be bought. In any case, there could be a few well-heeled suitors for Salesforce including the likes of Microsoft or IBM. Oracle is allegedly not interested.

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That backdrop should be noted during Salesforce's first quarter results, which are expected to be strong. Analysts are pondering potential deals though. Wall Street is expecting first quarter earnings of 14 cents a share on revenue of $1.5 billion.

Evercore analyst Kirk Materne said in a research note:

We believe the current stock price is already discounting a fairly low probability of any transaction in the near-term...We believe that Salesforce got off to a solid start to the year as there appeared to be fewer changes to territory coverage this F1Q and better partner alignment on the whole. Furthermore, while we expect any contribution from Wave will be immaterial, the interest around the product is high and could provide a potential tailwind heading into the remainder of FY16.

Wave is Salesforce's analytics cloud and gives the company more access to business decision leaders as well as technology buyers.

By cloud, Salesforce is expected to be led by its Sales Cloud, which will take a hit by a stronger U.S. dollar, service, marketing and platform clouds are expected to grow more than 30 percent in fiscal 2016, said Materne.

What remains to be seen is whether all the talk of an acquisition will hurt deal flow somehow.

Cowen analyst Jesse Hulsing said in a research note:

Conversations with partners point to a continuation of the strong demand trends observed in Q4. Marketing Cloud feedback the most mixed, though many partners we spoke with aren't focused on implementing the solution. Analytics Cloud primarily being sold into Sales Cloud use cases; partners seeing interest, but still early days. While we have some concern about M&A reports impacting deal flow, we did not pick up anything from the channel indicating this has started to occur.