Charlie Bottle

Salesforce.com: Another Chance to Short

I agree but think that DLR and SBAC offer even better shorting opportunties.

Salesforce.com Turns 10, Where Do They Go from Here?

"the next ten years"?...

"And while Salesforce.com isn’t at the point where the growth figures will slow too much, the trip to $5 billion in revenue will require different techniques."?...

Is this some kind of a joke?

All indications are that the company's operating cashflow has stagnated or is already declining. Looking at deferred revenues, Revenue growth should tapper of in late 2009. The comppany will have no choice but beg to be bought by Oracle by 2010 the latest.

Salesforce.com: Great Company, Exorbitant Valuation

Sunil,

The January growth in cashflow albeit low is almost irrelevant because the deceleration in growth is vertigineous and shows no signs of abating. Clearly there is some inertia in sales in that processes that had been ongoing for months possibly still got closed. Next quarter we will strart seeing the full impact of the post lehman freeze up. As layoffs continue and new sales calls do not get return soon enough cashflow growth will turn negative. Not that cashflow means anything is this company run by an egomaniac who will likelly burn the cash rather than return it to its shareowners. Why does anyone think that heads have starting rolling in the executive suite? Because all is dandy? If you think this is a great ime to buy or hold this company. Godspeed.

DISCLOSURE: SHORT CRM

Salesforce.com Worth Half Its Current Price

GreyhairedFortraDevelo...

Thank you, your input is highly valued. I'm often wrong. What is the revenue model for The Force exactlly?

Salesforce.com Worth Half Its Current Price

jnoneiliv,

This article needs to be looked at in conjuntion with my previous one(seekingalpha.com/artic...).

CRM is a mature $7 billion industry which will contract with the global recession. Salesforce is a second rate palyer in the space with a 10-15% market share competing against much larger players who have become annoyed with them. A price war has begun with Oracle's net suite offering 50% discounts to SF's customers. MSFT has decided to launch a copycat of "the Force", just in case.

The only hype here is about "the cloud" and "software as a service" and "the Force", what's the big deal with offering applications over the internet? Everyone else is doing it anyway.

you're right you can look at multiples of sale (3.1X) or book value (6.1X) the conclusuion is the same this is an overpriced stock.

Salesforce.com Worth Half Its Current Price

PenName Dave, yes I meant cash. The Company has negative working capital because they collect cash from customers upfront and provide the services and pay commisions over time (yearly or quarterly). If the revenue becomes flat (imagine new customers are = churn+reduction in prices to keep customers), this would mean deferred revnues would be flat and deferred comissions would either be flat probably decrease (as new sales would have decreased), so the positive cashflow impact would disappear (and possibly turn negative). Also I forgot to mention another big component taht adds to the difference between earnings and operating cashflow is stock based compensation which is dillutive to existing shareholder and therefore need sot be taken into consideration.

Personally I think that revenues might actually decrease at some point in 2009. The CRM market will no longer be growing and they are competing with deep pocketed competitors. They will lose Exsiting customers to competitors (netsuite has just launched a 50% price cut for salesforce customers) and will decrease subs (because of layoffs) and pricing for the customers they retain.

Salesforce.com Worth Half Its Current Price

I meant it increased their operating cahshflow, not operating profit.

Salesforce.com Worth Half Its Current Price

PenName Dave, thank you. I'm very aware of their fiancials and looked at it from several angles. The company has negative working capital given that it receives ahead of providing the service (on quarterly or annual basis), as result of their growth this increased their operating profit. Given that I'm anticiapting a stagnating to decreasing sales this will disappear or even reverse. So lookin at EV/EBITDA multiple would be better to look at (right now it is about 20X compared ot 7X for MSFT). Still the company has recurring capex which I think it is not fair to exclude so I prefer to look at Earnings and P/E. Ben Graham was right.

Salesforce.com: Pricey and Coming Down Fast

My previous posting was for buylowsellhigh (I hope he got it).

Nicky, thank you for your comment. I think you may underestimate how much good Investing has to do with common sense and often casual observations which give you na hedge. I think it was Barton Biggs who said that specialists in a filed often undeperfom non specialists because often the odds tend to be with the simple and ovious outcome. Experts ofetn tned to have pet theories and look at complex webs of factors and get lost in it. I'm certainly not a specialist in CRM but am reasonably well informed and made a good faith effort to lay out my case based on facts and figures which I have provided here.

You on the other end, provided absolutelly no basis for your statement that my article is poor and that I do not understand the business, would you please explain why you feel that way?

Salesforce.com: Pricey and Coming Down Fast

The revolution will not be televised, will not be televised,
will not be televised, will not be televised.
The revolution will be no re-run brothers;
The revolution will be live.

Salesforce.com: Pricey and Coming Down Fast

Ikfhoo,

Thank you for your comment. I'm an investor not a technologist and (though not particullarly smart), I'm pretty good at smelling rats. Whenever I hear the word "paradigm change", I start sharpening the knife. Not that I am complaining, it provides me with unique opportunites for profit through shorting as long as you time it well.

Unwittingly, your comment realy bollsters my point - look at Java after 10 years...where did it get Sun? Absolutelly nowhere. How much should "Force" be worth to an investor? Absolutelly nothing.

Salesforce.com: It's All About the Guidance

Zach, entirelly agree with your analisys, and great timing on putting out - you were right on target.

CRM is one of the most overvalued stocks out there, it is not only priced for perfection in its only line of business (CRM) but also priced for world domination. It is very likelly to disappoint in any environment and almost sure to do that in a recessive environment like the present one. Still a lot of downside on the stock IMO.

Disclosure: short CRM