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Estimates rise and bullish commentary abounds following Salesforce.com's (CRM +10.1%) strong FQ1...

Estimates rise and bullish commentary abounds following Salesforce.com's (CRM +10.1%) strong FQ1 report, featuring another quarter of surging deferred revenue, free cash flow, and sales expenses. Credit Agricole is upgrading shares to Buy, and Nomura (Buy) notes billings growth rose 34% in spite of concerns about weakness. During its earnings call, Salesforce noted Gartner now believes the company is the world's #2 CRM software vendor, ahead of ORCL and behind SAP.
Comments (3)
  • fatherabraham
    , contributor
    Comments (6) | Send Message
     
    When is this company going to make money? Its a utility - 90% of the revenue is renewals - why are sales and marketing expenses going up so fast?
    18 May 2012, 02:05 PM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (753) | Send Message
     
    It is making money on a free cash flow basis. I agree with those who think the stock is expensive, but bears shouldn't overlook free cash flow when Salesforce's business model guarantees it will almost always be higher than earnings (whether GAAP or non-GAAP).
    18 May 2012, 02:09 PM Reply Like
  • Jay Schembs, CFA
    , contributor
    Comments (131) | Send Message
     
    Majority of cash flow is from stock option expense and changes in working capital. Those are not sources of long-term value creation.
    18 May 2012, 07:02 PM Reply Like
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