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L.D. Salmanson

 
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  • Get Long. Get Short. BlackBerry's Value Ain't $8 [View article]
    HBS MBAs don't write theses...
    Sep 29 01:46 PM | 1 Like Like |Link to Comment
  • Get Long. Get Short. BlackBerry's Value Ain't $8 [View article]
    Very interesting analysis, and a great read. Thanks for sharing!
    Sep 29 01:44 PM | Likes Like |Link to Comment
  • More Than A Year Later: How Is Salesforce Holding Up? [View article]
    Funny, I remember that index.

    There are many guides on Google for running a simple MC simulation - I use Oracle Crystal Ball, but I know there are other platforms.

    Please do share your results - I expect little correlation.
    Sep 21 04:42 PM | Likes Like |Link to Comment
  • More Than A Year Later: How Is Salesforce Holding Up? [View article]
    Thank you for pointing that out. However, I am obviously calculating on FDB.
    Sep 4 01:51 PM | Likes Like |Link to Comment
  • More Than A Year Later: How Is Salesforce Holding Up? [View article]
    Again, I want to avoid this discussion, since it's not the terminal growth assumptions here that will skew the model (5%-7%, depending on event triggers), but rather the cost structure assumptions.

    Do trust that I am proficient at building models.
    Sep 4 01:50 PM | Likes Like |Link to Comment
  • More Than A Year Later: How Is Salesforce Holding Up? [View article]
    I don't think it's a matter of critical mass, but rather not being able to win certain clients without certain parts of the platform. Clients prefer (or preferred at least) one-stop-shops.
    Sep 4 11:00 AM | Likes Like |Link to Comment
  • More Than A Year Later: How Is Salesforce Holding Up? [View article]
    Only if I agreed with the conclusion. If market cap was $300B we would clearly be having a different (and more entertaining) discussion.
    Sep 4 10:59 AM | Likes Like |Link to Comment
  • More Than A Year Later: How Is Salesforce Holding Up? [View article]
    I have learned not to share my models. I hope you respect and understand.

    I will say that I only use models as a sanity check. I am a firm believer in top-down research and analysis, and while I have a tremendous amount of respect for different methodologies, must follow what works for me, and plays to my strengths. In that context, I'm looking for continued adoption by enterprise clients, and limited slip in margins. I am also tracking expense ratios as they pertain to different types of cost stream (such as hiring) - to the extent possible. I'm trying to isolate the various expenses, and identify the source of increase/decrease in spend rate.

    I look at price targets on a longer term scale, so I would only feel comfortable discussing a 3-5 year range, in which I predict a 20%-30% increase. I believe down-side is somewhat limited for that same time period, somewhere in the 9%-14% range.

    Again, models are subjective, and people put different weights on different metrics. This is my methodology.
    Sep 4 10:58 AM | Likes Like |Link to Comment
  • More Than A Year Later: How Is Salesforce Holding Up? [View article]
    Thank you for your comments, and for keeping up the discussion. I’ll try my best to respond:

    1. Maybe “stellar” was not the best use of words, but I was trying to convey a feeling in the market of another good quarter. Your point (as was made earlier) is definitely spot on. I believe the story here is not of a reduced top line, but rather that of an increase in expenses, resulting in a reduced bottom line. In that sense, many investors consider this, still, a good quarter. Nonetheless, point accepted.

    2. That’s a loaded question, but I will take a shot anyway (feel free to follow up on this point further). First, Amazon is generating far more attention than SF ever has! Amazon offers a huge suite of products, and is a massive IaaS. AWS is the natural choice for most developers. However, it’s not a platform, just an environment. Dreamforce 2012 was packed with teens, as are many other smaller events. The candidates for some of the venture opportunities are also far younger than I expected (I had the privilege of working with one such company, and met two others). I expect DF13 to be similar. While in itself not a strong indicator, together with others, it suggests to me an interest that extends the current development cycle.

    3. Since enterprises have moved from securing devices to securing software packages, the ability to package SF in a secure manner through Good is very valuable. It could have been a partnership with Airwatch or someone else, but Good is definitely a strong partner!

    4. Revenue, thank you for clarifying; 3-5 years.

    5. I advise a couple of UK companies developing on the SF platform (among other platforms), and their client bases are very interesting. Both companies are early-stage, but are showing 20-30% increase in sales to large-enterprise clients (the majority of their market). A couple such integrators are the Nuage Group and Wipro – both have been hiring to keep up with SF integration demand (the Nuage group used to be a small group within 1080, but is now a major part of their business). I feel the sentiment in the developer community (for what it’s worth).

    6. Clients, referring to potential clients of SF. Fair question, as I was not clear at all. I was referring mainly to the Sales cloud. Customer support is actually stagnating a bit, and is not gaining major ground vs. SAP or MS. Also ET adds to that trend, as many clients were already choosing ET’s marketing cloud over more traditional vendors.

    7. I was actually referring to the PaaS competitors such as Sugar or Zoho – isolating SF from SAP, MS, and Oracle for a moment. In which case it’s more like 80% SF. But to your point, SF is definitely able to go head-to-head with SAP (and more importantly in my opinion, MS), even if currently market share is lower. If I recall correctly, that Gartner report predicted CRM to lead the pack by the end of 2013.

    Thanks again for the comments.
    Sep 4 09:52 AM | Likes Like |Link to Comment
  • More Than A Year Later: How Is Salesforce Holding Up? [View article]
    Thank yo for your comment - good questions!

    I think of it as an investment in infrastructure. Salesforce is building a menu of products, so to speak, that together form a cohesive platform that meets the needs of most enterprise clients. The menu is still missing some items (the ET purchase fills a rather large gap, despite its price tag), and the cost structure will be skewed towards larger expenses until the platform is complete. As a sanity check, I expect expense trends to slow down and start to reverse by Q2 2014. If that does not happen, I will need to revisit m model.
    Sep 3 02:24 PM | 2 Likes Like |Link to Comment
  • More Than A Year Later: How Is Salesforce Holding Up? [View article]
    Thank you!

    I don't think the purpose of the ET purchase was an increase in top line (there are surely better candidates in the market for that), but rather acquiring a certain client portfolio that could be leveraged throughout the SF platform. Specifically, marketing clouds are becoming a hot spending ticket at large enterprises.

    The price was more a result of bidding against large rivals than anything else. However, I agree, as was stated before by a number of commentators, ET would surely want this deal to be in cash.
    Sep 3 08:39 AM | 1 Like Like |Link to Comment
  • More Than A Year Later: How Is Salesforce Holding Up? [View article]
    Thank you for your comments!

    These are all things I would like to see as well! However, I would argue that the company is still growing very rapidly, but that such growth in its core products is somewhat lost in the rhetoric. The tax rebate is exactly that - I one time item that I assume that most investors are backing out (I know I am).

    It's funny, as it took me many years to see the value in CRM. It was only when I could witness the growth with my own eyes that I was convinced. I see this development continuing in full force, and it's funny that you brought up AMZN (another one of my long-term success stories), as I believe there is a lot of similarity in their models. I think CRM is building out a platform, a process that will take many years, but when completed, will position CRM as a dominant market leader with multiple monopolized revenue sources. I also dislike(d) both CEOs in a similar manner - nothing professional, just a personal disdain.

    Great discussion - would love to follow up in another 18 months to see how things played out.
    Sep 3 07:03 AM | 1 Like Like |Link to Comment
  • More Than A Year Later: How Is Salesforce Holding Up? [View article]
    Thank you - good comments.

    I don't tend to read analyst reports (sell-side or otherwise), and am well aware of the lowered guidance. In no way am I championing the company for meeting its (reduced) targets, rather, I'm championing their ability to capture a larger share in the enterprise market. I think that I specifically mentioned that the financials have not really changed, and that the market has learned to chill expectations regarding future earnings. My intent may have not come across in its entirety.

    I tend to look at larger and longer-term trends. I look at how integrators are implementing Salesforce in large-enterprise clients, at the identity of such integrators (not small shops, but rather large firms), and finally, the development pipeline and interest of the developer community. Using these metrics (and you may obviously chose to use different ones), Salesforce still looks good to me. That's not to say that I don't have concerns, or that I will hold such opinion indefinitely, but I am still confident that the Salesforce growth story is continuing.
    Sep 2 12:36 PM | Likes Like |Link to Comment
  • More Than A Year Later: How Is Salesforce Holding Up? [View article]
    While there are many competitors in this space (and it is surely not a winner-take-all market), none are really comparable to Salesforce. As a reader mentioned to me in a private message, Microsoft Dynamics is becoming a big player in this space, and I would be looking in that direction for competition; surely not SAP, Oracle, or any of the smaller open-source platforms.

    That being said, I agree with your premise of commoditization. This will be true, however, only for such products that are offered across the board, whereas more propriety platforms will still command higher premiums and margins - such as the social and marketing clouds.
    Sep 2 07:35 AM | 1 Like Like |Link to Comment
  • More Than A Year Later: How Is Salesforce Holding Up? [View article]
    Not sure how to respond... I'm a contrarian investor by every definition. I was contrarian when recommending CRM when it was in the 30's, and I'm contrarian today. I also believe in deep value, and look at asset pricing through very long-term shades - CRM looks good to me through those filters. That being said, I respect your opinion, and will be happy to follow up in 16 months, as I did today, and see how things played out.
    Sep 2 06:52 AM | Likes Like |Link to Comment
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