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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 (1251) | 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, 02:48 PM Reply Like
  • kpcapitalpartners
    , contributor
    Comments (110) | 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, 03:07 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4029) | 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, 05:24 PM Reply Like
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