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Jay Schembs, CFA  

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  • Salesforce.com: Slowing Growth Could Turn Out To Be A Good Thing [View article]
    Investors can't have it both ways. Bulls argue CRM is GAAP unprofitable, but generates operating cash flow. The primary source of this operating cash flow, however, is non-cash stock compensation and growth of deferred revenue. As growth slows, CRM may begin to generate GAAP net income, but operating cash flow will be negatively impacted by the above-mentioned factors. Aggregate compensation packages will likely shift to a greater proportion towards cash, and deferred revenue will now turn into a cash use rather than source (or, at a minimum, a much less prominent source). Therefore, I think you will see very minimal improvements in cash flow even if the company begins to generate GAAP profits.
    Dec 17, 2014. 10:03 AM | 6 Likes Like |Link to Comment
  • Salesforce.com Eyes Overseas Expansion [View article]
    Robust analysis, thank you. I've said for years a P/S ratio of 8 indicates good value. We all can agree that relative P/S valuation is far more robust than other metrics.
    Sep 12, 2014. 12:31 AM | 1 Like Like |Link to Comment
  • Salesforce.com Has High Growth Potential: Initiating A $58 Price Target [View article]
    Can you please cite other companies of CRM's size who have successfully engaged in such a strategy?
    Sep 5, 2014. 10:39 PM | Likes Like |Link to Comment
  • Salesforce.com Has High Growth Potential: Initiating A $58 Price Target [View article]
    They've been going through an "investment phase" for 15 years.
    Sep 4, 2014. 06:18 PM | 1 Like Like |Link to Comment
  • Salesforce.com Has High Growth Potential: Initiating A $58 Price Target [View article]
    Calling your $58.09 price target "extremely conservative" is either extremely disingenuous or naive. Have you run any set of sensitivities projecting future cash flows? Unless you're assuming they take over the world, $58.09 is nowhere near a conservative price target.
    Aug 27, 2014. 11:43 AM | 4 Likes Like |Link to Comment
  • Salesforce.com: As An Investment, A Spent Force [View article]
    I've had this suspicion about CRM and other companies growing top-line rapidly with little to no profit (Z is another). My CPA friends tell me GAAP is pretty strict on pushing discounts from a contra revenue account to COGS or opex. However, this would certainly help explain the lack of operating leverage in these businesses.
    Aug 18, 2014. 04:01 PM | 2 Likes Like |Link to Comment
  • Here's Why Investors Are So Excited About Zillow [View article]
    Curious what you think fair value is for z?
    Aug 6, 2014. 09:48 AM | Likes Like |Link to Comment
  • Zillow Shares May Be No Place To Rest Your Head [View article]
    Great point Speetz. Insider selling isn't always a red flag, but when I see CEOs/CFOs exercising and selling options that don't expire until 2019 and 2020, I start to take notice.

    Lee, you make some interesting arguments, although as we know in the modern tech world, new ideas can very quickly displace today's hot fad. Anyone buying Z at these prices must have a lot of future unknowns work in their favor.
    Jul 10, 2014. 01:22 PM | 1 Like Like |Link to Comment
  • Zillow Shares May Be No Place To Rest Your Head [View article]
    Right, because Z at current levels is akin to Cisco in 1994.
    Jul 9, 2014. 07:57 PM | 2 Likes Like |Link to Comment
  • Twitter: The Tide Starts To Turn [View article]
    Do you really think relative valuation analysis yields meaningful conclusions, particularly at this stage in the valuation cycle of these names?
    May 29, 2014. 12:27 AM | Likes Like |Link to Comment
  • Salesforce.com's (CRM) CEO Marc Benioff on F1Q 2015 Results - Earnings Call Transcript [View article]
    CC old friend, I'm sure you'd like my thoughts on the conference call:

    1. Benioff seemed uncharacteristically reserved. He even allowed Block onto the call, which was a bit weird.
    2. Benioff appeared to be eating a sandwich between questions, but I was unable to ascertain as to whether it was Subway or Potbelly.
    3. No mention of the billions of Force.com transactions, but I'm sure they're still really phenomenal and interesting.
    4. Very blatant dodge of the Exact Target contribution question by Graham Smith. Perhaps his previous lawsuits while CFO at Nuance have caused him to temper his verbal responses.

    As an aside, ~25% operating cash flow growth for the year implies roughly 10% growth for the rest of the year. Hardly phenomenal, particularly when you consider the dilution that will occur each and every quarter along the way.

    Hope you're well!
    May 20, 2014. 11:23 PM | 3 Likes Like |Link to Comment
  • Salesforce +2.5% AH on FQ1 beat, solid revenue guidance [View news story]
    Eric, you make good points, and I agree the company certainly is not well analyzed under strict GAAP terms. However, Lares Capital also makes compelling points. You also omitted the fact that more than 100% of this quarter's operating cash flow came from liquidation of A/R. The company guided for fiscal year cash flow growth of ~25%, which implies only 10% growth for the rest of the year. When you consider that nearly all of these cash flows result from add-backs for stock comp, depreciation & amortization, and changes in working capital - all low quality sources of cash - this remains a highly speculative investment.
    May 20, 2014. 11:17 PM | 5 Likes Like |Link to Comment
  • These Numbers Show That Box CEO Aaron Levie Is A Genius [View article]
    Given all you've said, curious why you're long SFDC?
    Apr 22, 2014. 09:29 AM | Likes Like |Link to Comment
  • These Numbers Show That Box CEO Aaron Levie Is A Genius [View article]
    The presumption that a customer will be around 10, 5, or even next year is rather ambitious. First mover advantage to acquire market share makes sense if there's some sort of network effect or other way in which customers are locked in, but that's nowhere to be found in SAAS.
    Apr 17, 2014. 11:31 PM | 3 Likes Like |Link to Comment
  • Salesforce.com Is Living On Borrowed Time [View article]
    Per Kelly Services' 10K, they have 1,100 employees at their HQ and 7,000 staff members in network branch offices. I'm sure they all need CRM licenses, including back office and accounting folks (you can always be selling, you know). So that's about 125 licenses per employee. Makes sense.
    Mar 13, 2014. 07:40 PM | 2 Likes Like |Link to Comment
COMMENTS STATS
136 Comments
240 Likes