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Jay Schembs, CFA  

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  • How Can Salesforce.com Make Profits? [View article]
    Non-GAAP, of course.
    Oct 21, 2013. 07:55 PM | Likes Like |Link to Comment
  • Cashin sees bubble in cloud/mobile tech names [View news story]
    NYSE margin debt reaches record in Sep 2013. Excess cash lowest (most negative) since Aug 2000.

    http://bit.ly/H6ELaL
    Oct 21, 2013. 01:57 PM | Likes Like |Link to Comment
  • Cashin sees bubble in cloud/mobile tech names [View news story]
    "All those mentioned now do make money"

    YELP, Z, WDAY, NOW, FEYE, DATA - none of those are profitable; most not even close.

    Also, FB EV/revenue is 20x, not 10 - but that's a rounding error these days.
    Oct 19, 2013. 11:42 PM | 1 Like Like |Link to Comment
  • How Can Salesforce.com Make Profits? [View article]
    I remember the author well from her superb writing on the South Park "Underpants Gnomes" story. For the uninitiated:

    1. Collect Underpants
    2. ?
    3. Profit

    Questions?
    Oct 18, 2013. 07:42 PM | 8 Likes Like |Link to Comment
  • Salesforce.com Might Be Riskier Than It Seems [View article]
    Damnit CC, you're nothing if you're not a stickler for details. I apologize. In fact, I've built a new screener for amazingness in CapIQ.
    Oct 18, 2013. 11:12 AM | 3 Likes Like |Link to Comment
  • Salesforce.com Might Be Riskier Than It Seems [View article]
    I'm certainly not advocating a position in VEEV at these prices, but trying to illustrate the fundamental deficiencies in CRM's operations.
    Oct 16, 2013. 06:17 PM | Likes Like |Link to Comment
  • Salesforce.com Might Be Riskier Than It Seems [View article]
    Has anyone looked at Veeva's S-1? Operating as a life science-focused cloud software/CRM provider (on CRM's force.com platform, no less), Veeva more than doubled revenue in the LTM ending 6/30/13 to $168 MM and generated a GAAP operating profit of $36 MM (22% margin). Meanwhile, CRM has $3.5 billion in revenue while generating a GAAP operating loss of $159 MM.

    This should raise serious concerns to a rational investor about CRM's business model if a rapidly-growing SAAS/CRM upstart USING CRM's PLATFORM can generate GAAP margins in excess of 20%, while CRM is more than 20x VEEV's size by revenue, yet cannot generate operating profits.

    On a side note, my read of VEEV's S-1 is that CRM is restricted from targeting a large potential customer market:

    "Our [Veeva's] agreement with salesforce.com also provides that we can use the Salesforce Platform as combined with our proprietary technology to sell sales automation solutions only to drug makers in the pharmaceutical and biotechnology industries, which does not include the medical devices industry or products for non-drug departments of pharmaceutical and biotechnology companies. Use of the Salesforce Platform to sell to additional industries would require the consent of salesforce.com...Our agreement with salesforce.com provides that salesforce.com will not position, develop, promote, invest in or acquire applications directly competitive to the Veeva CRM solution for sales automation that directly target drug makers in the pharmaceutical and biotechnology markets."
    Oct 16, 2013. 05:50 PM | 2 Likes Like |Link to Comment
  • Salesforce.com Might Be Riskier Than It Seems [View article]
    Chanos was on CNBC last month talking about his views, and someone (can't find the link to the clip) asked about a number of momentum, high-growth names, including CRM. While not explicitly responding to CRM, Chanos said one of the major accounting issues is the capitalization of R&D through acquisitions, which artificially decreases operating expenses.
    Oct 14, 2013. 01:48 PM | 2 Likes Like |Link to Comment
  • Chanos still short H-P, continues to like Apple/Samsung [View news story]
    I'd bet dollars to doughnuts the WDAY position is hedging a CRM short.
    Oct 10, 2013. 01:40 PM | 2 Likes Like |Link to Comment
  • Salesforce.com Might Be Riskier Than It Seems [View article]
    I also calculate the Z score would drop to 2.7 by simply writing off their $3.5 BN in goodwill (not to mention another $1.3 BN in capitalized commission expenses, capitalized software development costs, and acquired intangible assets).
    Oct 10, 2013. 12:48 PM | 6 Likes Like |Link to Comment
  • WWWW: The Greatest Stock Promotion Story Ever Told [View article]
    Most stock purchases assume a "cash-free, debt-free" balance sheet, meaning selling shareholders receive net cash on the balance sheet after redeeming existing funded debt.

    The purchase accounting issues here are similar to what CRM benefits from through their recent ET acquisition.
    Oct 7, 2013. 04:49 PM | 1 Like Like |Link to Comment
  • Netflix flies higher as Icahn ponders his windfall [View news story]
    Is that not a hint that he's a seller? Stock jumps 4%, makes sense.

    Bizarro Seinfeld episode redux.
    Oct 1, 2013. 01:31 PM | 3 Likes Like |Link to Comment
  • The Market Is Officially Entering Bubble Mode, In More Ways Than One [View article]
    He's not panning the company or its operating model; he's panning 40x sales. Do you disagree with that?
    Sep 20, 2013. 01:51 PM | 5 Likes Like |Link to Comment
  • More Than A Year Later: How Is Salesforce Holding Up? [View article]
    Let's do a simple sanity check on value, looking at three possible scenarios. In each case, I assume 605 MM shares out (based on CRM's basic share count in their FY2014 guidance), and a 10% cost of equity (generous in my opinion, but that's another discussion):

    A) Benioff's growth aspirations continue relatively unabated, growing revenue 25% annually through FY2021. The company is able to contain growth in sales and marketing expenses, leading to steadily rising net margins reaching 15% by FY2021.

    B) Growth moderates (as it always does over the long term) to 10% annually by FY2021. The company eventually turns profitable, but net margins end at 10% by FY2021.

    C) The highly competitive enterprise software market makes future growth difficult, yielding GDP-type growth of 3% by FY2021. The company eventually earns 5% net margins by FY2021.

    Results:

    A) FY2021 revenue of $19.2 billion with net income of $2.9 billion. Applying a 15x multiple on those earnings, discounting terminal value and net income up to that point at a 10% cost of equity, and dividing by 605 MM shares = $42.59 share price today.

    B) FY2021 revenue of $12.4 billion with net income of $1.2 billion. Using the same procedure in A = $19.09 share price today.

    C) FY2021 revenue of $10.7 billion with net income of $533 MM. Using the same procedure in A = $8.40 share price today.

    This is obviously a simplistic way of viewing the future, but I think demonstrates that there is much more downside risk in CRM than upside potential.
    Sep 4, 2013. 01:53 PM | 6 Likes Like |Link to Comment
  • Earnings Preview: Salesforce.com Fiscal Q2 2014 [View article]
    Convert, you're losing your edge. No reference to the amazing nature of CRM. Amazing companies obey no fiscal year - their financial performance transcends time.
    Aug 29, 2013. 11:49 AM | 3 Likes Like |Link to Comment
COMMENTS STATS
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