OK confession: I have a personal hate. Well, personal in the sense of the absurdity of Salesforce.com's (CRM) valuation. No company in this environment should trade at a trailing PE of 99, however immense the prospective market. Even after taking their deferred revenue cash, cashflow/share gives a price/cash flow north of 50 times.

Optimists will wave their romantic fingers at the potential market up there in the cloud. Well guys that cloud just got a massive shrink. Microsoft (MSFT) is offering their new SAAS product at a 40% discount to Salesforce, AND first 6 months free for an annual sub!

By any measure Salesforce.com's (CRM) fourth quarter was an exceptional performance in the savage economic environment companies face today. Revenue grew by 34% yoy, earnings almost doubled, and cash flow rose impressively. There were also substantial new contract wins; gains from upstaging the giants (Oracle (ORCL) and SAP) on their existing clients and outright wins on new tenders. Management was justifiably content with the quarter and their confidence reinforced about the future of Software as a Service within cloud computing. What’s there to complain about?

There is no problem with the company; it has demonstrated remarkable resilience and growth in a particularly stricken period. The problem is a significant moderation in the growth rate.

Subject: Severance Pay for Mr. Watkins.

To the Board of Directors of Seagate (STX):

The juncture we find ourselves at can be simply summarized as highly anxious credit and stock markets with uncertain but anemic economic growth forecasts. Though the carnage in equity markets may well be indiscriminate and savage, Terex (TEX) is down a massive 80% this year, substantially underperforming its industry peer, Caterpillar (CAT).

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In customary style and panache, Salesforce.com’s (CRM) founder, Marc Benioff, evangelised the virtues of the new alliance with Facebook. “A paradigm shift in the way consumers and commerce will interact in the future.” 

'Paradigm shifts' have one nasty drawback: the shifter usually ends in the garbage heap. CRM has surprisingly managed to keep its share price above 30 in this equity meltdown, the only rationale being its cashflow (the pe of 100 simply could not have survived this carnage). But that cashflow does not account for all the shares they issue to staff (it actually adds to cash) to retain them, in lieu of normal salary.  Well, now most of the recent options are under water (price down about 40% ytd and falling) we'll see how secure their people are, and how much more old-fashioned salaries they have to pay and that will filter, in the old-fashioned way, through the income statement.  

On Terex's (TEX) 3Q 2008 earnings conference call Friday, management prefaced their comments with the statement, “These are unusual times…Terex is prepared for the current environment and is managing with a focus on cash.”

Spot on guys. These are unusual times indeed, with dislocations in valuations and inexplicable events that are bound to confound the most seasoned investor, Terex management included.

When one listens to the upbeat tone of Salesforce.com’s (CRM) management on the Q2 conference call, one is surely bewildered by the street's reaction - a 15% haircut. After all, the company made their revenue and EPS numbers- what’s the fuss about?

Well let me clarify. Yes, they even eclipsed the street revenue forecast ($263.1m vs. the street’s $261m, a yoy leap of 49%) and reaffirmed their fiscal 09 targets (before the acquisition; by the way, how a $34m acquisition shaves 10% off EPS for an $8 billion company is a subject for another day).