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Salesforce.com (CRM -0.6%) will grow its annual sales from $3B in 2013 to $8B in 2016, thinks...

Salesforce.com (CRM -0.6%) will grow its annual sales from $3B in 2013 to $8B in 2016, thinks FBR, which notes Microsoft and Oracle are the only software companies to have ever shown a similar growth trajectory. The firm sees both Salesforce's flagship Sales Cloud solution and a slew of newer products (I, II, III) fueling a 25%-30% CAGR over the next 4 years, and sees its market cap eventually rising to $50B from a current $22B.
Comments (7)
  • Doyle3000
    , contributor
    Comments (1526) | Send Message
     
    $50b market cap for a company that continues to throw more and more Sales, Marketing R&D for less and less percentage growth and precipitous drops in profitability (or lack thereof)

     

    if FBR doesn't see a dot.com bubble here they are blind or more likely intentionally hyping a stock price that doesn't deserve today's valuation let alone one that is twice as high.

     

    FBR goes on my wall of joke analysts.
    7 Dec 2012, 02:30 PM Reply Like
  • TWagen
    , contributor
    Comments (143) | Send Message
     
    I agree and with Corporate budgets being what they will in the new year those projections are going to miss by a mile.

     

    By the way, No PE. Risk anyone ?
    7 Dec 2012, 02:48 PM Reply Like
  • jayg5555
    , contributor
    Comments (10) | Send Message
     
    Insiders are selling the stock. Also stock will have selling pressure due to possible higher capital gains taxes next year. It is wise to avoid being long on CRM for the near term.
    7 Dec 2012, 03:02 PM Reply Like
  • RonK2
    , contributor
    Comments (110) | Send Message
     
    What is weird with CRM is that if they do reach $8B in sales - The company is still overvalued at $157. But if CRM keeps issuing more stock options, the market cap will continue to rise without the share price having to rise.
    7 Dec 2012, 03:22 PM Reply Like
  • Diana
    , contributor
    Comments (134) | Send Message
     
    The real issue isn't how much the top-line will grow--it's how much the net LOSS will grow. Looking at the latest 10-Q filing--for the quarter ended October 31, 2012--revenues increased 35% YoY. That's great. Except when you consider the fact that net income DECREASED by 5,765%. That is not a typo.--net income decreased nearly 58 times [from a loss last Q3 2012 of -$3.8M to a loss this quarter (Q3 2013) of over -$220M].

     

    So at this rate, if Salesforce increases its revenues by 60%--as the article suggests-- it will increase its losses by over 10,000%.

     

    Of course, I don't really believe that will happen--but the point is--it's not just the top-line growth that matters. It's the earnings growth as well. And Salesforce hasn't had any--earnings that is.

     

    The company has been running operating losses for two years now--8 consecutive quarters of operating losses and 6 consecutive quarters of net losses. That's not the kind of 'growth' story investors find attractive.
    7 Dec 2012, 05:28 PM Reply Like
  • KenSF999
    , contributor
    Comments (4) | Send Message
     
    A key difference between Microsoft/Oracle and Salesforce? The first two actually earned profits as they grew...

     

    Salesforce has yet to actually make money; until they do, these valuation projects are total fantasies...

     

    Salesforce continues to generate cash by handing out huge piles of stock options to employees who then buy the stock at a discount when the options vest (providing cash to the company)... This is both dilutive AND hides the fact that Salesforce continues to bleed cash on an operating basis...

     

    The Salesforce Ponzi scheme, which inhererently depends on a rising stock price to generate cash, is doomed to break at some point...

     

    Proceed with caution...
    7 Dec 2012, 05:43 PM Reply Like
  • Diana
    , contributor
    Comments (134) | Send Message
     
    At one point, Salesforce *did* make money. And that's my main concern. It's understandable that in its early lifecycle a company running losses. However, when they hit that breakeven and begin to earn profits--the trajectory of those profits is supposed to be upward. In CRM's case, after many quarters of profitability, they began losing money. And continue to do so each quarter. That is the huge red flag imo.

     

    You have to ask yourself as an investor at what cost the growth in the top-line came.

     

    A business should exist to earn profits for its shareholders--not for big mouth CEO-buffoons to appear on financial networks touting their 'growth story'.

     

    (btw--my apologies for an error in my prior post (should be 40% CAGR not 60%)--but the point that the more they grow the top-line the more money they lose still stands.)
    8 Dec 2012, 10:52 AM Reply Like
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