Veeva falls; SA author reports Genentech dropped company for Salesforce


SA author Suhail Capital reports major Veeva Systems (VEEV -5.7%) client Genentech/Roche has dropped the company's cloud CRM software platform in favor of a custom product that leverages Veeva partner Salesforce's (CRM +3.6%) Force.com cloud app development (PaaS) platform.

Suhail points out Genentech was the first major company to sign up for Veeva's life sciences-focused cloud CRM solution (back in 2007/2008). It believes Veeva lost less than 2K seats, and that the move "appears to be consistent with Roche's global initiative to standardize on the Salesforce.com platform."

The author had previously argued Veeva's strategic partnership with Salesforce, through which Salesforce allows Veeva to use its infrastructure and provides it with "platform level functionality" in exchange for a fee (believed by Suhail to be ~20% of subscription revenue), limits Veeva's future growth, since it restricts the company from offering sales automation software to non-pharma/biotech companies.

In addition, Suhail suspects Veeva will have to likely make a "big financial concession" to Salesforce when its current deal expires next year, given its dependence on Salesforce's platform.

Pac Crest is defending Veeva. The firm points out Veeva and Salesforce have a non-compete agreement, and thinks the latter is motivated to see the former succeed.

Comments (3)
  • Doyle3000
    , contributor
    Comments (1979) | Send Message
     
    so CRM picks up 2000 seats and its market cap grows by a few billion - that's not irrational at all.
    15 Jan 2014, 02:48 PM Reply Like
  • kpcapitalpartners
    , contributor
    Comments (119) | Send Message
     
    And you think CRM is irrationally valued? CRM is selling at a screaming, bargain-basement price vs. VEEV. VEEV is the most irrationally-overvalued stock I have found since the 1999-2000 internet/tech bubble. It is obscenely valued by any fundamental valuation metric. Take a look at the CRM vs. VEEV fundamental valuation comparison sometime. Pure lunacy...and you have promotional snake-oil salesmen like VEEV's management & underwriters, Jim Cramer, etc. peddling & perpetuating this fraud

     

    I fear that "It's deja vu all over again."
    15 Jan 2014, 03:07 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11127) | Send Message
     
    Well done, Suhail. Prepare yourself for the wrath of the stock promoters. Meanwhile, here is what I did with your research combined with my own work on this silly company: http://seekingalpha.co...
    15 Jan 2014, 05:24 PM Reply Like
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